All signs point to a healthy November when chain stores report to Wall Street on Thursday. The drama for investors is what they say about the holiday season. The current batch of sales data will include results from Black Friday and the following Saturday, when shoppers flooded into discount stores and electronics chains in search of holiday markdowns. Early returns on the post-Thanksgiving rush indicate a great turnout, although aggressive pricing and promotions have stoked concern about whether the spending will continue into December. "We won't see too much in terms of earnings guidance tomorrow, since it's just the first month of the quarter and retailers are still cautious about how the season will turn out," said Ken Perkins, president of Retail Metrics LLC. "Investors will certainly have their ears peeled for any color that retailers can provide on Black Friday weekend and how things have gone since then." Overall, the International Council of Shopping Centers is expecting a 3.5% to 4% gain in November same-store sales for its aggregate index that tracks results over 70 major retailers. That compares to a light month last year, when November comps rose 1.7%. Same-store sales, or comps, serve as a key measure of a retailer's performance, covering sales at locations that have been open for at least one year. The results should get a boost from the holiday weekend, when the National Retail Federation reported that sales rose 22% over last year, with retailers recording an estimated total of $27.8 billion in sales. That figure is extrapolated from a survey of over 4,000 consumers. Perkins said it's probably on the high side, but it does reflect a successful beginning for a holiday season that is expected to yield a total sales gain of 5% to 6% over last year's November-December period.
"Friday was really a super day, particularly for consumer electronics and discount retailers," Perkins said. "Mall-based specialty chains didn't fare as well." Lackluster results for mall-based retailers were reflected in a separate report from ShopperTrak, which uses technology to track customer traffic in major retailing locations. It said consumers spent around $8.01 billion last Friday, down 0.9% from last year, and Saturday sales were flat compared with those of last year at $5.4 billion. That report excluded results at major, off-mall discount stores like Wal-Mart ( WMT), Target ( TGT) and Home Depot ( HD). Also, many consumer electronics locations, like Best Buy ( BBY) and Circuit City ( CC), are off-mall, and they were reported to be hosting large crowds of gadget-buyers over the weekend. For November, Wal-Mart reported after the weekend that its same-store sales are on track for a 4.3% gain. Those results would land at the midpoint of its previous guidance for an increase of 3% to 5%. Wall Street is expecting a 2.8% increase for its main competitor, Target. Meanwhile, teen clothing chains, like Abercrombie & Fitch ( ANF) and American Eagle Outfitters ( AEOS), are expected to show the strongest gains for the month. Analysts are forecasting a 21.8% jump in comps at Abercrombie, while American Eagle is expected to show a 10.7% gain. Other mall-based specialty chains are projected to be the weak link, with Gap ( GPS) headed for a 5% decline and Limited Brands ( LTD) expected to report a 1.7% rise. Chico's ( CHS), the red-hot clothing destination for middle-age women, already reported an 11.8% increase in November comps. With consumer attitudes showing a big rebound from the skepticism that followed a devastating hurricane season, and economic indicators showing an economy that continues to boom, traders are still weighing lingering concerns about consumers' debt loads. Despite last weekend's strong shopping turnout, the aggressive markdowns suggest that people are making a concerted effort to rein in their spending this holiday. "Retailers were showing the most aggressive pricing I've seen in quite some time, and I think that's a harbinger of increased promotions, markdowns and discounts as we go through the holiday season," Perkins said. "So, the impacts of this on profit margins is the big question, and we won't get much info on that until the December comps reports come out in January."