Nordstrom, Saks Sales Turnaround Spells Hope for Department Stores

Retail sales as a whole improved in October, indicating that consumers are actually starting to spend money again, despite predictions that this holiday season could be a dreadful one at cash registers. Enjoying that comeback are a few department-store chains -- some of them on the luxury end -- whose sales were hit hard when the recession began.
Nordstrom (JWN) posted an especially strong turnaround. Sales at stores open at least a year shot up 5.6 percent in October, a major improvement from its monthly average this year, which is at an 8.4 percent decline. The Seattle-based luxury retailer's results received a boost from strong sales in kids shoes, coats and dresses.

On the lower-price end of the price scale was Bon-Ton Stores (BONT), which also performed well in October. It's same-store sales came in at a 3.1 percent increase from the same year-ago period, significantly bettering its year-to-date average-monthly plunge of 6.9 percent.

Saks (SKS), a chain tormented by the recession, even managed a good month. October comparable sales crept up 0.7 percent, a serious improvement from September's 11.6-percent dive and a nine-month average monthly decline of 18.5 percent.

But unfortunately for department stores, October brought a little bad news as well. High-end chain Neiman Marcus saw same-store sales fall six percent, though it was admittedly a step forward compared to its 16.9-percent free fall in September. And discount leader JCPenney (JCP) posted a 4.5-percent comparable-sales dip.

Another thing to consider is that year-over-year sales comparisons for many of these chains are going up against terrible October 2008 results. For example, Nordstrom's 5.6-percent jump sounds great when taken at face value, but during the same period last year, its same-store sales dove 15.7 percent. Saks' 16.6-percent 2008 bomb was similarly bad. It's easy to look good compared to your bad self.

What does this mean for the all-important holiday season? Things are likely creeping in the right direction. But in contrast to the horrendous retail season of 2008, an improvement is far from far fetched.

Store image by Flickr page user Hans van de Bruggen.