Retailers Should See Sales Lift -- for Now

November reports likely will show gains that may not last.
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SAN FRANCISCO -- Heavy Black Friday discounting brought shoppers out of their funk in November, and that should mean an extra infusion for retailers in their monthly sales reports.

Most chains will post their November sales on Thursday, and the results should be noticeably better than those of recent months, when economic troubles combined with warmer-than-average temperatures to subdue shoppers.

With November marking the start of the holidays, it was hard for shoppers to ignore the onslaught of sales events designed to lure them into stores. The day after Thanksgiving, known as Black Friday, drew an estimated 147 million shoppers, up 4.8% over last year, according to the National Retail Federation.

The earlier part of the month may not have been so bad, either.

"We feel that retailers were able to build some positive momentum through the first few weeks of the month, which was a large factor in the positive Black Friday results we saw," wrote Adrienne Tennant, an analyst for Friedman Ramsey Billings, in a research report.

Tennant added that cooler temperatures helped bring out shoppers in November, releasing some of the pent-up demand for coats and sweaters that didn't sell during the unusually warm September and October.

Many retailers also will benefit from a calendar shift in November, which gave them an extra week of holiday-related sales but will leave them with one less week in December. Chains including

Saks

(SKS)

,

Nordstrom

(JWN) - Get Report

and

J.C. Penney

(JCP) - Get Report

have already said to expect outsized November gains for this reason.

The remainder of the year continues to look lackluster, with companies like

Macy's

(M) - Get Report

,

Ann Taylor

(ANN)

, Penney and

Kohl's

(KSS) - Get Report

having already cut their guidance ahead of the busiest shopping season of the year. Moreover, big promotions to drive sales may weigh on profit margins.

Richard Jaffe, an analyst for Stifel Nicolaus, said that although Thursday's reports should show robust November sales, particularly for the final week, retailers' tougher month will come in December.

"We anticipate a challenging retail month ahead, uncomfortable for most retailers as much of the business will come at the end of the month," Jaffe wrote in his research. "Judicious use of discounts and promotions will be key to driving sales while preserving margin as consumers procrastinate and plan to take advantage of the full weekend of shopping before Christmas this year."

Last year, Christmas Eve fell on a Sunday, when many chains close stores early.

Todd Slater, an analyst for Lazard Capital Markets, predicted November to be a good month for value-oriented retailers as well as for those catering to the luxury market.

Consumers have been trading down to value purchases, he wrote in his latest research, while discretionary purchases continue to take a back seat to consumables. As well, the high-end sector is more immune to economic turmoil than the mid- to low-end sectors.

Tennant expects teen retailers to come out on top in terms of sales for November, but does not anticipate much improvement from women's apparel, which has been struggling to win back customers.

Her picks for November include

Abercrombie & Fitch

(ANF) - Get Report

,

Gap

(GPS) - Get Report

,

Pacific Sunwear

(PSUN)

and

Urban Outfitters

(URBN) - Get Report

. She said these companies had successful Black Fridays, with fewer promotions than in the prior year.

"Therefore, even if these companies do not report comps that are a positive surprise, we think that there remains the potential for gross margin expansion over last year," Tennant wrote.