UPDATE: Retailers Nov Sales Show Strong Start To The Holidays

Retailers reported a strong start to the holiday season as their November sales were bolstered by aggressive discounting that started early in the month.

According to 27 retailers tracked by Thomson Reuters, sales at stores opened more than a year rose 6% in November, above the estimated growth of 3.6% and the year-ago gain of 0.6%. Many retailers started the holiday season early in November, blitzing shoppers with promotions because of concerns that the still-uncertain economy would hold them back.

"Retailers' game plan was aggressive promotions throughout the month," said John Long, retail strategist at Kurt Salmon Associates. "The results we are seeing are not solely the contribution of Black Friday sales." Black Friday is the retail nickname for the day after Thanksgiving.

The strong early start has prompted some to wonder if the consumer will continue to spend throughout the holiday season. The National Retail Federation projects holiday sales will rise 2.3% this year after a 0.4% gain in 2009 and a 3.9% drop in 2008.

"You can't take what happened in November and say this is what's going to happen for the season," said Paula Rosenblum, managing partner at Retail Systems Research, a retail advisory firm. "Consumers are experiencing frugality fatigue, so they went out there and shopped for the bargains. The real test is whether they will continue to spend."

Department stores had a strong November, with Macy's Inc. (M) reporting same-store sales up 6.1%, when a 5% increase was expected, and lifting its earnings guidance for the fourth quarter. While Black Friday weekend was "particularly strong," sales for the entire month exceeded expectations, Chief Executive Terry Lundgren said.

To keep holiday momentum going, Macy's has "a compelling promotional calendar" for the rest of the month, Lundgren said.

J.C. Penney Co. (JCP) reported a 9.2% gain in same-store sales, well ahead of expectations for 3.1%. J.C. Penney was among retailers that noted they saw considerable "self-buying," as shoppers used some discretionary dollars on themselves.

A surprise in the luxury group--given that this sector has been making a strong comeback--was Saks Inc. (SKS), which reported a 5.3% gain in same-store sales, below expectations for a 9.5% increase. The disappointing results were despite promotions at the store in November.

At mass merchant Target Corp. (TGT), "November sales were better-than-expected, driven by very strong traffic throughout the month," said Gregg Steinhafel, chief executive officer. With help from its 5% off program for purchases on its credit, debit or Visa cards, the retailer is "well-positioned" for December, Steinhafel said.

Teen retailers were at the extremes of the stores reporting same-store sales, showing the fickleness of the main demographic that shop at those chains as well as the power of aggressive discounts.

Abercrombie & Fitch Co. (ANF) said same-store sales rose 22%, well above the average analyst estimate of 6.8% on Thomson Reuters. Abercrombie's aggressive promotions likely weighed on low-price teen retailer Aeropostale Inc. (ARO), which surprised Wall Street by reporting a 1% drop in same-store sales, when analysts were expecting growth of 0.9%.

Aeropostale added that holiday sales trends "decelerated significantly" after Black Friday.

Fellow teen retailer Zumiez Inc. (ZUMZ) said it didn't experience the same post-Black Friday sales deceleration as Aeropostale. Zumiez's same-store sales rose 20.7%, above the Street's estimate of 12.6%.

Hot Topic Inc. (HOTT) reported the worst same-store sales figure among retailers, based in part on tough year-ago comparisons from sales of products related to the movie "Twilight". However, the company's comp of negative 2.1% was still narrower than the Thomson Reuters' estimate of a 4.6% decline.

The world's largest retailer, Wal-Mart Stores Inc. (WMT), does not report sales on a monthly basis.

Limited Brands Inc. (LTD), operator of Victoria's Secret and Bath & Body Works, said same-store sales rose 10%, when analysts projected a 4% rise. Limited also took a step away from the pack, saying it plans to reduce promotions, amid what it recognizes is a very competitive environment.

The reports generally keep with the strong industry numbers that came in for the Black Friday weekend, showing sales and customer traffic rose.

About 212 million shoppers visited a store or website over the Thanksgiving weekend, an 8.7% rise from last year, the National Retail Federation said. The average shopper spent $365.34, a 6.4% gain. ShopperTrak, a retail consulting firm, said sales rose only a bit on Black Friday itself but still set a record.

-Caitlin Nish contributed to this article

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

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