December Comp Sales Rise 3.3% on Mixed Holiday Results

Blizzard Tarnish December Retail SalesNew York—“Sales were decent but not great.”

That’s how Ken Perkins, president of Retail Metrics, summed up today’s December sales results from nearly two dozen major retailers.

Comparable store sales for the 20 companies Retail Metrics tracks gained 3.3% in December from a year ago.

“It was a highly promotional environment,” Perkins said. “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.”

Despite an overall increase, retailers reported mixed results. Retailers, such as Limited Brands Inc., Macy’s Inc. Zumiez and Nordstrom, posted strong sales gains that beat analysts’ average estimates. Several, including Macy’s and Limited, even boosted their earnings outlooks.

However, Target, Kohl’s and JCPenney were among those that cut their earnings outlooks after reporting weaker than expected sales.

Noting the highly promotional environment needed to prod consumers into spending, retail analysts noted that retailers who had spread out their promotions over the season did well. “While those that used up their promotions during the weekend after Thanksgiving suffered,” said Alison Paul, retail sector leader at Deloitte.

Promotions Cut into Margins

“The retailers who are still standing are the ones who did their homework several months ago and made decisions about promoting in waves,” Paul said. “Getting promotions right is an art form.”

“The holiday season was OK,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers (ICSC). “But because of the extremely competitive environment, stores had to do whatever it took to get those sales, and that affected profits.”

Economists pay particular attention to November and December sales results since they can account for as much as 40% of the year’s total sales.

Earlier this week, the ICSC reported a 3.5% increase in December comparable stores sales for the 25 retailers it tracks. For November and December combined, holiday sales rose 3.3%, a solid increase, but behind last year’s 3.8%.

While the country’s biggest retailer, Walmart, doesn’t report monthly sales, others reporting today included:

Macy’s Inc. reported its December comparable store sales rose 6.2% better than analysts’ average estimate expecting a 5% increase. For the combined November/December holiday season, the department store retailer said comparable store sales rose 5.7%. Online sales, which include Macys.com and Bloomingdales.com, surged 35.8% in December and rose 40.3 % during the holiday period.

As a result of the strong sales improvement, Macy’s Inc. raised its fourth quarter earnings estimate to as much as $1.60 a share, after earlier projecting a maximum of $1.57 a share. Full-year comparable store sales revenue is now expected to increase 5.3%, up from a previous guidance for increase 4.8% to 5%.

The company also said its revised forecast excludes about $25 million to $30 million in costs tied to the five Macy’s stores and four Bloomingdale’s stores that it plans to shutter due to underperformance.

•JCPenney posted a 0.3% growth in its December comparable sales, ahead a 0.1% decline analysts’ average estimate expected. The company posted a 3.7% increase a year ago. Total sales decreased 2.3%.

Top performing categories included children’s apparel and women’s accessories. While overall sales and traffic were softer than anticipated, the company noted better trends in its stores during the week leading up to Christmas and increases in traffic and orders on jcp.com during the key holiday shopping periods of the week after Thanksgiving and the week before Christmas.

•Kohl’s posted a 0.1% decline in comparable store sales, well below analysts’ estimate for 2.2% decline. Total sales were up 1.7% to  $3.246 billion, up 1.7% from December 2010.

The retailer lowered its fourth quarter earnings estimate as a result. JCPenney now expects earnings between $1.70 to $1.73 for the quarter, down from a previous estimate for $1.93 to $2.04.

“Our December sales results were short of our expectations although much improved over November’s results,” said Kevin Mansell, Kohl’s chairman, president/ceo.

Dillard’s said December total sales rose 3% to $1.1 billion and comparable store sales rose 4%.

During the December holiday period, Dillard’s said sales were “slightly” above the average total company trend in its central region and below trend in its eastern and western regions. Sales in shoes and cosmetics were “significantly” above trend during the period, while sales in the home and furniture category was “significantly” below trend.

•Saks Inc. reported a 5.8% increase in its December comparable store sales. Total sales increased 4.7% to $452.5 million. Strongest categories at Saks Fifth Avenue stores included women’s and men’s contemporary apparel, handbags, women’s shoes, fine jewelry, men’s accessories, and fragrances. Saks Direct sales performed well during the month, the company reported. Quarter-to-date, comparable store sales increased 7.1%.

•Nordstrom Inc. said Thursday that its December comparable store sales rose 8.7%, ahead of the 5.1% rise that analysts expected.  Total sales rose 12.7% to $1.57 billion. 

•Stage Stores Inc.  reported its comparable store sales rose 1.2% in December, helped by sales in cosmetics, footwear and home and gifts, among other categories. Total sales rose nearly 3% to $274 million. The company said its cold-weather initiative was not as successful as anticipated because the weather was warmer than usual. Revenue so far in the fourth quarter is up 3.4% to $395 million.

Bon-Ton Stores Inc.  said that its December comparable store sales declined 0.7%. Total sales decreased 1.1% to $505.2 million. Tony Buccina, vice chairman and president of marketing, noted that December sales were affected by unseasonably mild weather. “Cold-weather categories, which are highly profitable and represent approximately 25% of our business, were down mid-teens on a percentage basis,”Best performing categories included home items, cosmetics, fine jewelry, children’s and better apparel.

The department store retailer also said it expects to lose $1 to $1.30 a share, down from a previous forecast of a loss of 65 cents a share to a gain of 25 cents a share.

•Target posted a 1.6% gain in December comparable store sales, missing analysts’ average expectation for a 3.1% increase. “December sales were below our expectations as growth in Grocery and Beauty offset softness in Electronics and Music, Movies & Books,” Gregg Steinhafel, ceo, “Sales and traffic were strongest in the week leading up to Christmas as guests waited to shop for last-minute gifts.”

As a result, the mass merchant retailer cut its fourth quarter profit outlook to $1.35 to $1.43, compared with $1.43 to $1.53 previously. Looking ahead, Target said it anticipates January comparable store sales to rise in the low-to-mid single digits.

•Gap Inc. reported its total December comparable store sales fell 4% worse than the 1.3% decline that analysts had predicted. Total sales declined 1% to $1.98 billion. Glenn Murphy, coo, called December’s performance “below our expectations” despite the fact he expected an increase in deep discounts.

All divisions, including international, suffered declines in comparable store sales. Banana Republic posted a 2% decline, Old Navy North America dropped 4%, Gap North American fell 4% and the international division posted a 6% decline.

Limited Brands Inc.  posted a 7% rise in its comparable store sales in December again beating analysts’ average estimate for a 5.6% growth. Total net sales grew to $1.87 billion. The company noted that its total sales for the recent month were negatively impacted by the sale of its third party apparel sourcing business in the beginning of November.

•American Eagle Outfitters Inc. reported its comparable store sales for November/December grew 12%, driven by a 20% comparable store sales gain in November and record sales on Black Friday weekend. Total sales for the November/December period rose 15% to $887 million.

Nonetheless, the teen specialty retailer said its “strategic decision to take a more aggressive promotional stance” during the last two weeks of December would hurt its profit margins. Consequently, the company now expects fourth quarter results to be lower than anticipated earlier. Projecting earnings are now expected in the range of 33 to 35 cents a share, down from earlier guidance in the range of 40 to 44 cents per share.

•Wet Seal, Inc. reported a 3.7% decline in its December comparable store sales versus a decline of 2.1% last year. Net sales rose 0.2%to $79.6 million.  Susan McGalla ceo, said that the company’s Wet Seal division had a slow start in the first two weeks of December, but promotions were less aggressive than last year. “As such, despite a highly promotional competitive environment and commodity cost pressures, we were pleased to generate improved merchandise margin at Wet Seal through this very important month,” she added. “At Arden B, sales trends remained similar to recent months, with strength in our dress, woven bottoms and jewelry businesses more than offset by weakness in all other categories.”

Online sales declined 20% “which was similar to November’s trend and reflects an improvement from prior months driven by progress in the Wet Seal division toward better aligned merchandising between the online channel and the stores.”

Looking ahead, the company expects fourth quarter earnings in the range of 3 cents to 5 cents a share, with a comparable store sales decrease in low single-digits. Analysts’ average estimate expects 4 cents a share.

Ascena Retail Group said total December comparable store sales rose 14% lead by a 19% comparable store sales increase at its Justice stores, 12% at dressbarn and 6% increase at maurices.

David Jaffe, president/ceo, said “our investment in inventory versus year-ago levels helped drive strong December sales. Though we remain cautious, we are encouraged by the consumer’s strong response to each of our brands and expect to report mid-single digit comparable store sales increases for the second quarter.”

The specialty retail company also raised its fiscal 2012 forecast to earnings to a range of $2.60 to $2.70 a share, up from its previous guidance of $2.55 to $2.65.

Aeropostale, Inc. said its comparable store sales for the nine weeks ended Dec. 31, dropped 10% versus a 4% decrease a year ago. Total sales decreased 5% to $682.6 million.

Thomas P. Johnson, ceo, said, “As we discussed on our most recent earnings call, this holiday selling season reflected aggressive levels of promotions throughout the mall.  During the quarter, we continued to manage our business carefully and ended the month with inventories well controlled. As we approach the new fiscal year, we remain committed to executing our merchandise initiatives and improving our financial performance.”

•Buckle, Inc. posted an 8.9% increases in its comparable store sales in December. Total sales increased 12.4% to $181.8 million from $161.8 million in the year-ago period.

•Zumiez Inc. reported that its December comparable store sales rose 9.2% increase beating analysts’ average estimate expecting 5.1% growth. Total sales climbed 18.1% to $104.6 million.

As a result of the strong performance, the company boosted its fourth quarter profit estimate to 57 cents to 58 cents a share, up from the previous estimated range of 52 cents to 54 cents per share. Analysts’ estimate expects 54 cents. Total fourth quarter sales are now expected to be around $180 million to $181 million, up from the previous range of $174 million to $177 million.

•Ross Stores posted a 9% increase in its December same store sales on top of 4% and 12% gains in the prior two years. Total sales were up 14% to $1.149 billion.

As a result, the company lifted outlook range for the fourth quarter. Ross Stores now expects earnings per share of 82 to 83 cents a share, up from previous estimates for 77 to 80 cents a share.

The company said its forecast update was based on above-plan sales and favorable gross margin trends for the first two months of the quarter and continued assumption for a 1% to 2% increase in January same store sales.

•TJX Companies, which operates T.J. Maxx, Marshalls and HomeGoods, reported an 8% increase in comparable store sales. Total sales climbed 8% to $3.3 billion.

“We believe that value remains critically important to consumers, and that our great values, brands and gift-giving selections drove large increases in customer traffic during the month,” Carol Markowitz, coo, said. “Further, we made a strategic decision to price aggressively in order to reinforce our value position in a very promotional retail environment and to clear cold weather apparel in this unseasonably warm winter.”

TJX also announced a 2-for-1 stock split today in the form of a dividend.

Cato Corp. said December comparable store sales decreased 1%. Total sales increased 2% to  $107.5 million. The company said it expects fourth quarter earnings to be toward the lower end of its previous forecast for 32 to 35 cents a share.

•Stein Mart Inc.  said its December same store sales were flat compared with the same month last year. Total sales declined 2% to $166 million.

Its stores in Florida and the Gulf Coast had the poorest performance in December while those in California, Texas and the Midwest performed the best. The retailer said ladies’ casual sportswear, accessories and intimate apparel exceeded its forecast while ladies’ boutique and career sportswear, as well as home textiles, experienced weaker sales.

•Costco Wholesale Corp said that its December comparable stores sales rose 7% just missing analysts’ average estimate for a 7.6% increase. Total sales rose 9% to $10.05 billion. The comp store increases reflected a 7% growth in the United States and 9% internationally.

 

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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com