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U.S. Chain Store Sales Up 0.1 Percent in September

First increase in 14 months, according to ICSC

U.S. chain store sales in September increased 0.1 percent on a same-store basis compared with the same period last year, representing the strongest reading since July 2008, when sales increased 3.3 percent, according to the International Council of Shopping Centers (ICSC).

"Small as that gain was, it was the first year-over-year increase since July
2008 and marked a significant turning point for the industry, as well as the start of the retail recovery," Michael P. Niemera, ICSC Chief Economist and Director of Research, said in a statement. "To be sure, the retail recovery will be uneven, and growth will be in spurts and fits, but it seems increasingly clear that it is recovery."

Discount stores grew by 0.5 percent, following a drop of 0.1 percent in August. This brings the year-to-date average for the sector to a decrease of
0.7 percent. Target Corporation reported a net retail sales increase of 1.3 percent for the five weeks that ended on Oct. 4, which represents a change of 0.7 percent compared to the previous quarter. In a statement to the press, Gregg Steinhafel, chairman and CEO of Target emphasized the stronger-than-expected retail segment performance had helped boost the company¹s sales.

Wal-Mart and K-mart were excluded from the totals as they only publish same-store sales data on a quarterly basis, The next release is expected next month.

The wholesale clubs sector also posted a moderate increase, with an overall gain of 0.8 percent. That total is increased to 4.2 percent when fuel sales are excluded. Costco increased its sales by 1 percent to mark its second consecutive monthly increase. This gain is less than the 2 percent uptick seen in Aug 2009. BJ¹s Wholesale continued in its decline, which began back in March, to fall 0.5 percent. This loss is a substantial slowdown of the declines seen in August (down 6 percent) and July (9.1 percent).

Comparatively, drug stores did enormously well, posting a 3.7 percent jump in September, marking the largest growth since a 4.6 percent uptick in April. Monthly totals for the market currently average 1.3 percent.

Same-store sales at Walgreen¹s continued to increase in September (5.3 percent) to follow in steady growth since March 2009. Year-over-year sales for all stores, including those open less than a year, jumped 10.3 percent from $4.8 billion in 2008 to $5.3 billion. Rite Aid, however, again saw decline (0.3 percent), with a 3.1 percent drop in front-end sales and a 1.1 percent gain in pharmacy sales. The drop follows losses of 1.9 percent in Aug and 0.6 percent in July and June.

At J.C. Penney Co. Inc., same-store sales decreased 1.4 percent for the five weeks ended Oct. 3, compared with a 12.4 percent decrease in September 2008.

This is better than the company's guidance for the period, which estimated same-store sales to decrease 3 percent to 6 percent. The company, in turn, has raised its earnings guidance for the third quarter. Total sales in September decreased 0.6 percent. J.C. Penney completed its 2009 new-store expansion program during September with the opening of three new stores.

Over at Macy's, same-store sales were down 2.3 percent for the five weeks ended Oct. 3, and total sales dropped 2.4 percent to $2.043 billion, compared with $2.093 billion for the five weeks ended Oct. 4, 2008. For the year to date, Macy's same-store sales are down 8.2 percent, and total sales are down 5.5 percent to $13.948 billion, compared with $15.244 billion for the first 35 weeks of 2008.

Online sales (Macys.com and Bloomingdales.com combined) were up 14.8 percent in September 2009 and 13.3 percent for the year to date. (Online sales are included in the same-store sales calculation for Macy's.)

Meanwhile, same-store sales at Neiman Marcus were down 16.9 percent to $344 million for the five weeks ended Oct. 3, compared with $414 million for the five weeks ended Oct. 4, 2008. Total sales dropped 14.8 percent to $354 million year-over-year.

In the five-week September period, comparable revenues in the specialty retail stores segment, which includes Neiman Marcus Stores and Bergdorf Goodman, decreased 17.6 percent.

At Saks Inc., same-store sales decreased 11.6 percent for the five weeks ended Oct. 3, and owned sales decreased 10.2 percent to $242.1 million, compared with $269.6 million for the five weeks ended Oct. 4, 2008.

The Saks Fifth Avenue stores experienced continued weakness across all merchandise categories during the month. Saks Direct and Saks OFF 5TH showed relative strength in September.

On a quarter-to-date basis, for the two months ended Oct. 3, owned sales totaled $402.9 million, compared with $466 million for the two months ended Oct. 4, 2008, a 13.5 percent decrease. Comparable-store sales decreased 15 percent for the two-month period.

On a year-to-date basis, for the eight months ended Oct. 3, owned sales totaled $1,573.9 million, compared with $1,959.3 million for the eight months ended Oct. 4, 2008, a 19.7 percent decrease. Comparable-store sales decreased 20.6 percent for the period.

Looking ahead, the ICSC expects U.S. chain store sales for October will be flat compared with October 2008. In addition, ICSC Research projects U.S.
holiday sales for the November-December 2009 period will increase by approximately 1 percent based on either GAFO store sales or the ICSC's tally of major chain store sales. Shopping center sales are expected to increase by 1.8 percent this holiday season.

With reporting by Alex Palmer.