Retailers Report Solid Finale to Holidays

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retailers report solid finale to holidaysNEW YORK (AP) - Many retailers are reporting solid sales gains for December, capping a decent holiday season, but shoppers bent on discounts exacted a high price.

Merchants had to mark down coats and other gifts to get shoppers to buy in a challenging economy. A mild winter also didn't help, wilting shoppers' appetite for cold-weather merchandise. That resulted in a string of retailers, including Target Corp. (TGT), Kohl's Corp. (KSS), J.C. Penney Co. (JCP) and The Children's Place Retail Stores Inc. (PLCE), reducing their earnings outlooks.

The heavy discounting is also raising concern about what it will take to get shoppers to spend again in coming months.

As retailers reported their results Thursday, Limited Brands Inc. (LTD), Macy's Inc. (M) and Nordstrom Inc. (JWN) posted strong revenue gains that beat analysts' estimates. Among the notable laggards was Target Corp., which cut its earnings outlook after a slim sales gain that was below expectations.

The revenue figures are based on revenue at stores open at least a year. That is considered a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

"Sales were decent, but not great," said Ken Perkins, president of RetailMetrics, "It was a highly promotional environment. There were clear winners and losers in the holiday season. It just tells you how difficult it was to drive traffic against a backdrop of a soft economy."

December's results offer an important benchmark for retailers and economists. During the holiday shopping season, merchants can make up to 40 percent of their annual revenue. The period that runs from November through December also gives valuable insights into what it takes to get Americans to spend in the weak economy.

Clearly, it took a lot of "50 percent off" signs to win over shoppers. For the official start of the holiday shopping season, stores opened as early as Thanksgiving Day, plying shoppers with discounts that resulted in record sales.

But shoppers took a longer-than-usual breather after that. Some stores had to discount more than they had planned in the final days before Christmas to attract shoppers. Post-Christmas bargains were even better. Express stores, for example, promoted an "End of Season" sale, with merchandise prices reduced by up to 70 percent.

Costco Wholesale (COST) Corp.'s revenue at stores open at least a year rose 7 percent in December, narrowly missing Wall Street's expectations. Analysts surveyed by Thomson Reuters predicted that the figure would climb 7.6 percent.

Target posted a 1.6 percent gain in December as consumers waited until the last minute to shop and electronics sales were weak. The company lowered its fourth-quarter earnings guidance, and its stock tumbled in premarket trading.

The discounter has faced heightened competition from Wal-Mart Stores (WMT), which brought back layaway in toys and electronics for the holiday season and is hammering its low-price message.

Wal-Mart no longer reports sales on a monthly basis.

Among department stores, business was mixed.

Upscale stores enjoyed a strong holiday season, without having to resort to rampant discounting. Nordstrom had an 8.7 percent increase in revenue at stores opened at least a year. That was above the 5.1 percent forecast. Analysts expected a smaller 5.7 percent rise, according to Thomson Reuters. Saks Inc. (SKS), which operates Saks Fifth Avenue, posted a 5.8 percent increase, meeting Wall Street estimates.

Macy's benefited from its efforts to tailor merchandise to local markets. It posted a 6.2 percent increase in December. The results beat Wall Street's estimate of 5 percent. For November and December combined, revenue at stores opened for a year rose 5.7 percent. The department store chain raised its earnings outlook.

But J.C. Penney Co. and Kohl's Corp., both of which target middle income shoppers, had a more challenging season. Kohl's posted a 0.1 percent decline, well below Wall Street's 2.2 percent estimate.

"Our December sales results were short of our expectations although much improved over November's results," said Kevin Mansell, Kohl's chairman, president and chief executive officer in a statement.

Penney reported a 0.3 percent increase in revenue at stores open at least a year, which was a bit better than the 0.1 percent dip that Wall Street expected. It noted better trends in its stores during the week leading up to Christmas and increases in traffic and orders on its website during the week after Thanksgiving and the week before Christmas.

Limited, the parent of Victoria's Secret and Bath and Body Works, reported that revenue at stores open at least a year rose 7 percent in December. The results beat expectations and the company raised its fourth-quarter guidance. Analysts expected a smaller 5.7 percent rise, according to Thomson Reuters.

The Children's Place Retail Stores Inc. lowered its earnings guidance for its fiscal fourth quarter on Thursday, saying that higher costs and unseasonably warm weather hurt its performance as it sharply marked down prices to move winter clothing.


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Kate

Seems to me the high end stores where the affluent shop posted better than expected gains some without discounting. The stores geared to middle class and below didn't do as well as expected some with very small gains. What does this say. The well off aren't hurting while the middle and lower income folks are still struggling.

January 06 2012 at 1:00 AM Report abuse +1 rate up rate down Reply
candalou2

the Christ holiday sales were fair but the question is what will happen in Feb. when many people cannot pay their credit card bills

sails may decline rapidly

January 05 2012 at 10:40 PM Report abuse +2 rate up rate down Reply
tutularu

Everyone we know shopped sales at 50% off or better...period. As for the mall..haven't been there in a couple years..way too expensive. I am sure a lot of people went way into debt this season. We carefully shopped with cash only. It is over, we are not in debt one penny, and everyone was happy with what they received. Now if they can wait until Nov. to start to push consumers...life would be better. If they start early next year, we will still not start until the week before xmas...cheapest time. Have a good year everyone!

January 05 2012 at 7:48 PM Report abuse +3 rate up rate down Reply