November Chain Sales Mixed

By Alan Wolf -- TWICE, 12/4/2008

New York — Despite the surge over Black Friday weekend, sales at the nation’s leading discount chains were mixed for November, with consumers directing most of their dollars toward basics like food and healthcare.

The big exception was Wal-Mart, where lower gas prices and aggressive discounting helped boost net November sales 6.5 percent to $21.5 billion at its flagship stores, while same-store sales rose 3.4 percent.

The world’s largest retailer said lower fuel costs spurred increased shopping trips and freed up discretionary income, which shoppers spent on consumer electronics, apparel and home goods in response to new merchandising programs.

Target didn’t fare as well. Net sales there fell 6.1 percent in November to $5.6 billion while same-store sales declined 10.4 percent. CE was cited as the month’s strongest hardline category, although consumer spending was focused mostly on non-discretionary items like food and healthcare.

Target president/CEO Gregg Steinhafel said the results reflect “a particularly challenging environment” marked by consumer cautiousness and promotionally driven purchasing behavior. A post-Thanksgiving sales spike that peaked on Black Friday was insufficient to offset earlier weakness, he said.

At Costco, worldwide net sales fell 3 percent to $5.6 billion in November while same-store sales in the United States edged up 1 percent, excluding gasoline. The warehouse club described TVs as the “one bright spot” in non-food sales, with unit volume up 50 percent year-over-year. Traffic was also up by 2.8 percent for the month, although average transaction size declined 7.5 percent.

At Wal-Mart’s Sam’s Club unit, net sales rose 1.4 percent to $3.7 billion while increased traffic boosted same-store sales 3.5 percent, excluding fuel. As at Costco, food was a key sales driver, although a members-only Black Friday promotional event generated additional traffic and sales, Sam’s Club president/CEO Doug McMillon said.

At BJ’s Wholesale Club, net November sales rose 5.2 percent to $783.2 million and same-store sales, excluding fuel, increased 6.2 percent, driven by a 14 percent spike in comp-store sales of food. Comp sales of general merchandise fell 4 percent, with CE — including TVs and prerecorded video — among the chain’s weakest performers.

As previously reported, Conn’s, the multiregional CE and appliance chain, said a 64 percent sales spike on Black Friday and a 50-percent increase over the Thanksgiving weekend pushed net November revenue up 23 percent and same-store sales ahead 12 percent.

But according to a pre-holiday report from MasterCard, nationwide sales of CE and major appliances fell 22.1 percent year-over-year during the first two weeks of November, following a 19.9 percent decline in October.