Shoppers grappling with rising layoffs and shrinking retirement accounts dug deep into survival mode last month, resulting in sharp January sales declines for many retailers and raising more concerns about the financial health of the industry.
As merchants reported their sales figures early Thursday, the malaise crossed the spectrum of retailing, from department chains to teen chains. Wet Seal wtsla, Stage Stores ssi and Children's Place Retail Stores plce were among those that reported deeper-than-expected sales declines. Wal-Mart wmt was a notable exception, posting sales that beat Wall Street's forecast.
"Sales are coming in extremely soft, and we see more of the same for at least three to six months," said Ken Perkins, president of research company RetailMetrics. "Shoppers continue to be under pressure. They are fatigued and tapped out. They are feeling pressure from all fronts. And there's absolutely no incentive to shop."
A sales tally by Thomson Reuters found that 12 retailers it tracks beat expectations, while 11 missed projections. The tally is based on same-store sales, or sales at stores opened at least a year, which are a key indicator of retailer's health.
January is the least important month of a retailer's sales calendar, but the figures only confirmed the deterioration of consumer spending. The retail industry has posted sales declines since October, according to the International Council of Shopping Centers-Goldman Sachs index, and many analysts believe that will continue through the first half of the year.
Shoppers have worries from slumping home prices to tight credit and shrinking retirement accounts. But the biggest concern is job security and income — and that may only be reinforced by data Thursday showing that new claims for unemployment benefits jumped to their highest level in more than 26 years. The unemployment rate — now at 7.2% — is expected to jump to 7.5%, a 17-year peak, in January when the government releases new figures Friday.
In this environment, stores are slashing prices to try to pull in shoppers. Already many chains, including AnnTaylor Stores ann and Banana Republic, are discounting spring merchandise.
And with shoppers retrenching, retailers and suppliers are looking for ways to cut costs. Macy's m, Bon-Ton Stores bont and apparel maker Liz Claiborne liz are among those that have announced layoffs in recent days.
"They are hunkering down," said Chris Donnelly, a partner in the retail practice at consulting group Accenture. "There is this key focus on survival."
Wal-Mart, which had stumbled in December, came back in January to post a 2.1% increase in same-store sales, excluding fuel. That was better than the 1.1% gain that analysts polled by expected. The company said same-store sales were strong in grocery and health and wellness.
The retailer says total sales edged up nearly 2% to $27.74 billion from $27.26 billion last year.
Wal-Mart also said it would no longer provide monthly sales forecasts.
Instead, the world's biggest retailer said that it would give forecasts on a 13-week basis, four times a year.
"We believe this guidance is a more appropriate measure for our investors, particularly in volatile times when consumer swings are more difficult to predict," Chief Financial Officer Tom Schoewe said in a statement.
Stage Stores said its January same-store sales dropped 13.1%, deeper than the 8.3% decline that Wall Street anticipated. Limited Brands ltd posted a 9% decline, though that was less severe than the 15.9% drop analysts expected.
Children's Place suffered an 11% decline, worse than the 2% drop Wall Street projected. And Wet Seal announced a 14.7% decline, deeper than the 11.8% analysts anticipated.
Costco Wholesale cost, which had also been one of the few bright spots, on Wednesday reported a 2% drop in same-store sales, a little better than the 2.8% decline that Wall Street expected. But the warehouse operator warned that its profit for the quarter ending in February will "substantially" miss Wall Street estimates due to poor sales and margins.