Generous discounts lured American to stores for holiday gifts in November, providing cheer and robust sales gains for retailers. That raises hopes, already buoyed by reports of crowded malls over the crucial Thanksgiving weekend, for a strong holiday shopping season.
As retailers report their monthly results Thursday, it showed that many different types of shoppers were in the mood to buy, from the affluent to teens. Stores reporting gains that topped Wall Street expectations included Costco Wholesale Corp., Target Corp., the owner of Victoria's Secret and teen retailer Abercrombie & Fitch.
That underscores that many people were not only buying gifts for others but throwing in items for themselves, including high-priced push-up bras and shoes. That's a big difference from the last two Christmases when shoppers were focusing on practical items like coffee pots and socks for others and buying little for themselves.
The results are based on revenue at stores opened at least a year and are considered a key indicator of a retailer's health.
"Overall, discretionary spending looks to be making a comeback," said Ken Perkins, president of RetailMetrics, a research firm. "Consumers are still looking for deal; that is deeply ingrained in the consumer." However, the upbeat commentary from retailers' reports Thursday "are encouraging signs."
The strong results from November followed tepid sales in September and October, dragged down in part by unseasonably warm weather. Americans, however, are still cautious about spending and are sticking to budgets amid job worries. And there's still concern shoppers are done buying for now and will wait last minute for the best holiday deals.
Encouraging economic signs may have consumers feeling better. Americans' income rose 0.5 percent in October, boosted by a 0.6 percent rise in wages and salaries, according to a government report released last month. That was after incomes didn't rise at all in September.
At the same time, layoffs are slowing. Initial jobless claims dropped by 34,000 to a seasonally adjusted 407,000 in the week ending Nov. 20, the Labor Department said. Claims have fallen in four of the past six weeks.
The improvements helped to lift confidence to a five-month high in November, according to the Conference Board's monthly survey released Tuesday.
Costco Wholesale Corp. reported a 9 percent increase in revenue at stores open at least a year. That was above the 6.2 percent estimate expected by analysts surveyed by Thomson Reuters.
Target Corp. posted a 5.5 percent increase in revenue at stores opened at least a year, above the 3.7 percent estimate.
"November sales were better than expected, driven by very strong guest traffic throughout the month," Gregg Steinhafel, chairman, president and CEO of Target, said in a statement. Steinhafel noted that the retailer has gotten strong response to its 5 percent discount offer to customers who pay with Target's credit or debit card. The incentive was launched in mid-October.
Limited Brands, which owns Victoria's Secret and Bath & Body Works, reported a 10 percent increase, exceeding the 4 percent estimate from Wall Street analysts.
Macy's Inc. reported a 6.1 percent; analysts had expected 5 percent. The department store chain raised its outlook for fourth-quarter earnings and revenue at stores open at least a year.
Teen retailer Abercrombie & Fitch, which had been hurt by young people flocking to less expensive brands during the depths of the recession, reported a robust 22 percent gain, far above the 6.8 percent estimate. That compares with a 17 percent drop in 2009 compared with the previous year.
That's a strong signal that teen shoppers are ready to splurge, Perkins said.
© 2010 The Associated Press.