November was yet another brutal month for U.S. retailers, according to new figures that showed stunning sales declines across a broad array of consumer goods.
Figures released on Tuesday in the SpendingPulse report, from MasterCard Advisors, showed that sales of electronics and appliances sank 25.2 percent in November, compared with the same month last year. Luxury goods were down 24.4 percent, and specialty retail, which includes clothing and department store sales, fell 20.2 percent.
Those figures were all several percentage points worse than the comparable numbers for October. The report, while not the last word on the performance of retailers last month, suggested that the lines of bargain-hunting consumers that turned out for Black Friday had not managed to salvage retail sales for November. Definitive word on the question will come Thursday, when retailers themselves release their sales figures for the month.
Standard & Poor's Equity Research Services is forecasting an 11.3 percent sales decline for its index of 14 apparel retailers and a 3.6 percent drop for its broader measure of 25 retailers. John Morris, an analyst with Wachovia, said in a report this week that most retailers were pessimistic about November sales when they discussed their earnings this month.
The MasterCard Advisors report estimates sales, using some data as well as computer modeling to estimate spending with other forms of payment. When retailers release their own figures, all signs are that they will confirm the bad news.
Analysts said November had a rocky start because consumers were preoccupied with the presidential election. The third week of the month was also tough, said Michael McNamara, vice president of SpendingPulse, because consumers avoided stores, waiting to shop the sales on Black Friday.
And shop they did. Conflicting reports from various analysts and industry groups agreed on one thing: sales surged on Black Friday.
ShopperTrak, a research firm, said sales were up 1.9 percent on Saturday and Sunday. Consumers generally bought lower-price items, though, like clothing, books and DVDs.
That was a trend throughout the month: the higher the price, the more reluctant consumers were to spend. McNamara said that, in general, purchases of more than $1,000 plummeted far more than 25 percent. Electronics items costing more than $1,000, for instance, were down 30 to 35 percent in November compared with the period a year ago.
For months, consumers shellshocked by the state of the economy have been hoarding their cash and trading down to cheaper stores. Discounters like Wal-Mart, BJ's Wholesale Club and T.J. Maxx are expected to continue to fare better than other stores when the retailers report on Thursday.
As if retailers did not have enough to contend with already, their sales for the month were hurt by a calendar shift. Last year, there was a week of post-Black Friday shopping in November. This year, there were three days. Standard & Poor's and analysts at other equity research companies said that loss would hurt November sales from 3 to 5 percent.
The next few weeks will show whether retailers can maintain the momentum generated on Black Friday. Jennifer Black, president of Jennifer Black & Associates, which follows apparel retailers, said in a report this week that it was most likely "just the beginning of a longer-term ratcheting down of apparel consumption in the United States."
The good news for stores is that there will probably be another shopping surge 5 to 10 days before Christmas. Historically, that is when most consumers turn out to finish their holiday shopping.
McNamara said falling gas prices might make consumers feel better about driving to many stores, giving retailers a lift.
As for all those drastic price cuts, "the only way it helps the retailer," said Marie Driscoll, an analyst with S&P's Equity Research Services, "is it's clearing through inventory."
