Retailers Report Mixed Holiday Sales

NEW YORK – The 2004 holiday shopping season turned out to be a bumpy one, with last-minute shoppers giving some retailers solid results but other storeowners struggling to a disappointing finish.

It was hard to discern a trend Thursday as merchants reported December sales, the final assessment of the holiday season. There were strong and weak performers in nearly every retail sector — Costco Wholesale Corp.(COST) , Target Corp. (TGT) and upscale stores like Neiman Marcus Group Inc. (NMG.A) all surpassed Wall Street projections but Sears, Roebuck and Co. (S), Gap Inc. (GPS), Pier 1 Imports Inc. (PIR) and jeweler Zale Corp. (ZLC) were among the disappointments.

Wal-Mart Stores Inc.(WMT), which had to step up discounting after a slow start to the season, posted a decent but not outstanding 3 percent rise in same-store sales, or sales at stores open at least a year. That was a little better than Wall Street's forecast.

"The Christmas season was just OK, clearly salvaged by the last-minute shoppers and steep discounting," said Ken Perkins, an analyst at RetailMetrics LLC, a research firm. "Stores that have been struggling over the last couple of months appear to be continuing that trend. And for stores that have been doing well over the last several months, December was a good month."

The International Council of Shopping Centers (search)-UBS preliminary same-store sales tally of about 76 retailers for December rose 2.7 percent, which was below the already reduced forecast of 3 percent to 3.5 percent.

That means same-store sales for the combined November-December period were up 2.3 percent, below the 2.5 percent to 3 percent forecast, according to Michael P. Niemira, chief economist at the association. November's final same-store sales tally was up a slim 1.8 percent.

The holiday performance was weaker than the 4.0 percent gain posted in 2003, and in line with the holiday 2000 and 2001 seasons, which averaged a 2.3 percent gain, he said.

Still, as Niemira noted, the holiday season "had a lot of things going on," making it difficult to measure its success. The season was marked by the increasing popularity of gift cards, whose sales are not recorded until consumers redeem them, and the increasing popularity of online shopping, whose sales are not included in same-store results.

Online sales for the November and December period rose a better-than-expected 29 percent to $15.8 billion, according to comScore Networks Inc. (search)

The holiday season had an uneven start, prompting many merchants to step up discounting more than they did a year ago after a relatively disappointing Thanksgiving shopping weekend. Still, consumers continued to hold back and didn't start shopping seriously until the week before Christmas. At apparel retailer AnnTaylor Stores Corp. (ANN), sales "were better than we had anticipated given November's weak performance, with most of the improvement coming in week five" of the season, chairman J. Patrick Spainhour said in a statement.

Although procrastinating has become the norm during the holidays, consumers' uneasiness contributed to their late shopping — they were looking for marked-down merchandise. While gasoline prices have fallen, they are still high, and consumers, particularly low- and middle-income Americans, have cut spending on non-essentials. Many consumers are also worried about job security.

The Labor Department underscored the uneven nature of the labor market Thursday, reporting that the number of new people signing up for jobless benefits shot up last week. New applications filed for unemployment insurance increased by a seasonally adjusted 43,000 to 364,000, the highest level since late September.

Wal-Mart had to work hard to generate December's 3 percent same-store sales gain, which was at the high end of the company's projections, and higher than the 2.3 percent forecast by Wall Street analysts in a survey by Thomson First Call.

Target had a 5.1 percent gain in same-store sales, better than the 4.2 percent estimate. Total sales rose 11.3 percent.

Costco had a 9 percent increase in same-store sales, better than the 6.4 percent Wall Street expected. Total sales rose 11 percent.

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"In general, Christmas business surged late in December, as we had expected," Edmond J. English, president and chief executive officer, said in a statement.

Among department stores, upscale merchants did the best. Neiman Marcus enjoyed a 10.8 percent increase in same-store sales, better than the 7.9 percent Wall Street anticipated. Total sales rose 8.2 percent.

Sears suffered a 3.0 percent same-store sales decline in its domestic business, worse than the 0.2 percent increase the company anticipated. Total sales fell 2.4 percent.

"Relatively strong sales at the end of the holiday shopping season were insufficient to offset a slow start to the month," said Alan J. Lacy, chairman and CEO, in a statement.

Penney had a 1.2 percent decline in same-store sales, better than the 2.7 percent Wall Street expected. Total sales declined 1.3 percent.

Federated Department Stores Inc. (FD) had a 2.3 percent increase in same-store sales in December, better than the 1.1 percent increase that Wall Street expected. Total sales rose 1.9 percent.

May had a 3.3 percent same-store sales decline, closed to the 3.5 percent forecast. Total sales rose 13.0 percent.

Among apparel chains, Limited Brands Inc. (LTD) had a modest 2 percent same-store sales gain, better than the 1.4 percent estimate. Total sales rose 2.6 percent.

AnnTaylor had a 1.5 percent same-store sales decline. Still, that was much better than the 10.2 percent forecast. Total sales increased 11.1 percent.

Gap had a 1 percent same-store sales decline, worse than the 0.1 percent Wall Street expected. Total sales rose 2 percent.

Pier 1 (PIR) suffered an 8.8 percent decline in same-store sales, and consequently reduced its fourth-quarter earnings outlook. Analysts had expected a 4.3 percent decline; total sales fell 3.5 percent.

And Zale reported a 0.7 percent decline in same-store sales for the combined November and December periods. It did not break out the figure for December. Total sales for the two-month period increased 2.1 percent.

Teen retailer Pacific Sunwear of California Inc. had a 5.3 percent same-store sales increase; Wall Street expected 4.0 percent. Total sales rose 16.4 percent.

On Wednesday, American Eagle (AEOS) reported same-store sales soared 32.8 percent, well exceeding the 18.8 percent forecast. Total sales rose 41.2 percent. Also Wednesday, Nordstrom Inc. (JWN) reported a same-store sales gain of 9.3 percent, better than the 3.6 percent analysts expected. Total sales were up 11.7 percent.