Good Tidings: December Comp Sales Better Than Expected

Even post-Christmas shopping helped some retailers beat sales forecasts. Others weren’t so lucky.

New York—Despite unpredictable weather and politics in Washington, retailers managed to beat what had been lowered expectations for December comparable store sales.

Of the 17 or so major retailers reporting today (excluding drugstores), total December comparable store sales rose 4.5%, topping analysts’ estimates for a 3.3% increase. Even better, the figure was a big improvement on the 1.6% increase posted in November and a 4.2% increase in December 2011, according to Thomson Reuters.

In another finding, Retail Metrics reported that comp sales rose 4.8%, ahead of its most recent forecast for a 3.4% gain. TJX Companies and Ross Stores both had 6% gains, again exceeding expectations.

“A few retailers had a strong month and it really lifted the number up,” said Ken Perkins, Retail Metrics’ president.  “That final week was stronger than most of us thought it was.”

Meanwhile, the International Council of Shopping Centers (ICSC), which tracks leading retailers, issued another positive comparable store report showing a “solid 4.5% year-over-year increase.”

The strong gain, which was at the high end of ICSC’s expectations, came on the heels of the weaker November performance. As a result, the traditional holiday spending period (November/December) posted a sales gain of 3.1%, which was in-line with ICSC’s initial forecast released in September (+3.0%).

To Top It Off: Shoppers Procrastinated Worst Than Ever

“While the profile was more uneven between months, between weeks and between retailers, the overall aggregate performance was largely as expected,” said Michael P. Niemira, vice president of research and chief economist for ICSC. “Despite the worry of the slow start to the holiday season, sales rebounded in December as consumers took advantage of more shopping days this year compared to last. That last-minute shopping, coupled with post-Christmas bargain hunting and early gift-card redemption helped propel sales at the end of the month.”

Companies like Costco, TJX and Ross “are able to thrive in whatever economic environment they happen to be operating in” by adjusting their business models, inventory levels and sales strategies better than many peers, said Craig Johnson, president of Customer Growth Partners.

Some analysts said many retailers sacrificed profit by aggressively marking down merchandise to lure shoppers into stores. Strong sales did not always translate into a blockbuster holiday season for some companies.

Target, Limited Brand, Wet Seal and Stage Stores felt the pinch as consumers were cautious in their holiday spending, for instance.

A range of issues were brought up as factors for the bumpy 2012 holiday ride: the repercussions of Superstorm Sandy, the lack of must-have items at retail, a front-loaded season kicked off by a strong Black Friday and Cyber Monday, consumers upset over the Newtown shootings as well as the 24/7 news coverage of what was considered an impeding “fiscal cliff.”

Added to this mix were consumers’ procrastinations as many put off shopping until the final days before Christmas, and even post-Christmas. Even the weather didn’t seem to cooperate. Besides a Christmas Eve blizzard, December was warmer-than-average, blunting demand for coats and cold weathergoods. All in all, December has shaped up to be the second warmest in more than 21 years as a whole, according to Weather Trends International.

December’s Ups and Downs

Below are December sales reports from major retailers that still report monthly figures. These retailers represent only about 13% of total retail and don’t include major retailers such as Walmart, JCPenney, Dillard’s, and Sears Holdings, none of which release such figures anymore.

Macy’s Inc. reported its comparable store sales rose 4.1%, just edging past the 4% rise that analysts’ average estimate expected. Total revenue rose nearly 4% to $5.1 billion, up from $4.92 billion last year.

However, Macy’s said that its comps sales for November/December rose 2.5% less than the company expected. Therefore, the department store company lowered its comparable store sales expectations for its fourth quarter to 3% to 3.5%, down from prior estimate of 4.2%.

Terry Lundgren, chief executive, blamed the lower-than-expected sales on the repercussions of Superstorm Sandy and economic uncertainty for the sales miss.

Meanwhile, Macy’s said it will close six underperforming stores as part of a normal review of its business. These include a Bloomingdales Fashion Show Home Store in Las Vegas; and  Macy’s in Paseo, Colo.; Belmont, Mass.; Honolulu, Hawaii; St. Paul, Minn.; and Houston, Texas. Closing the stores will cost $2 million to $4 million taken in the fourth quarter.

●Kohl’s Corp. reported lower-than-planned sales in December, prompting the department store to lower its estimates for fourth quarter and its fiscal year.

Nonetheless, Kohl’s comparable store sales gain of 3.4% still beat analysts’ expectations for a 1.2% increase. Total sales grew 4% to $3.37 billion.

For the November and December period, total sales increased 0.7% and comparable store sales increased 0.1%.

“Sales came late in the holiday shopping season and, as a result, were at deeper discounts than planned,” said Kevin Mansell, chief executive. “We are taking the necessary markdowns in the fourth quarter to manage our inventory as we transition into the spring season.”

●Nordstrom, Inc. reported an 8.6% increase in its comparable store sales, ahead of the 3.4% increase that analysts had expected. Total sales rose 9.4% to $1.72 billion.

Nordstrom said that sales were particularly strong in the last week of the season, since shoppers got a full three-day weekend before Christmas, which fell on a Tuesday.

Best performing categories included children’s and women’s apparel and handbags. Sales were strongest in the Midwest and South.

The company said it would open new locations including a full-line store in Wauwatosa, Wisconsin in 2015, and three other Rack stores in 2013.

● Bon-Ton Stores Inc. said that despite a storm that disrupted its post-Christmas sales even, the department store company still had a 2.4% increase in its comp sales. Total revenue rose 1.5% to $512.9 million.

“We are pleased to report a 2.4% same-store sales increase in December, despite several days of challenging weather which adversely impacted our post-Christmas sales event,” Brendan Hoffman, president/ceo.

Best performing categories were fine jewelry, women’s sportswear, dresses, women’s outerwear and footwear. E-commerce posted double-digit sales gains, the company said.

●Stage Stores’ December comparable store sales rose 2.7%, missing analysts’ expectations for a 5% rise. Combined November/December comp sales were up 5.9%. Total revenue rose 5% to $287 million.

According to Michael Glazer, president/ceo, strong sales the final week of December helped to offset weakness earlier in the month. Glazer said that shoppers seemed to wait until right before Christmas to finish their shopping.

Best performing categories were misses’ sportswear, petites, plus sizes and junior’s. The Southwest and South Central regions outperformed.

●Target Inc. said that its December comparable store sales were essentially flat  due to “softness” in sales during the first weeks of the month. Analysts’ average estimate had expected a 0.8% increase in comp sales. Total sales rose 0.8% to $10.1 billion.

Despite the flat sales, Target said its still expects to meet or “somewhat exceed” the lower end of its prior forecast, which would top expectations.

“Similar to November, profitability for December benefited from our continued focus on achieving an appropriate balance between price investments and driving sales, combined with thoughtful inventory management,” Gregg Steinhafel, chief executive, said.

●Gap Inc. reported a 5% increase in its comparable store sales, thanks to an impressive gain at its Old Navy North America stores. That easily beat analysts’ estimate for a 3.5% increase and sent the company’s share up in early trading today..

By division, North American Gap comp sales rose 2%. Banana Republic reported a 1% increase in comps, but Old Navy North America posted a 13% jump in its comp sales. Comp sales at the company’s international division fell 6%.

“Customers responded favorably to our product offerings and promotions during the holiday season overall,” said Glenn Murphy, chairman/ceo of Gap Inc. “We’re pleased to continue delivering positive comps across all our brands in North America.”

Gap also said today that it was adding a luxury division to its brands with the purchase of Intermix for $130 million. Gap also reported that its board approved $1 billion for the company to buy back its stock, replacing a completed program of the same amount.

●Limited Brands Inc., which operates Victoria’s Secret, reported comparable sales rose 3%, trailing analysts’ projections for a 4.7% gain. Total net sales hit $1.947 billion compared to net sales of $1.868 billion last year.

Victoria’s Secret, usually the company’s stellar performer, posted flat comparable store sales while La Senza reported a 9% drop in comp sales. Only Bath & Body Works showed a 7% in comp sales.

January sales may increase in the “low single digits,” the company said in a statement.

●Cato Corp. said its December comp fell 7%, resulting in a lower forecast for the company’s fiscal year report. Total revenue fell 4% to $107.5 million.

“December same-store sales results were well below expectations and our year-to-date trend,” said John Cato, chief executive.

The company, which operates 1,312 stores in 31 states, now expects fourth quarter net income of 34 cents to 36 cents a share, from its prior guidance of 38 cents to 42 cents a share.

● Buckle Inc.’s December comp sales rose 1.0%, better than the 0.3% decline that analysts’ had predicted. Total sales increased 1.8% to $185.0 million.

When the teen retailer’s comparable store sales had dropped 0.1% in November when analysts expected a 2% gain, expectations for retailer have cratered amid early indications that holiday retail sales this season grew at the slowest rate in years.

●Wet Seal Inc., parent to Wet Seal and Arden B stores, said its December comp sales fell 9.7% on top of a 3.7% decrease a year ago. The company said the results were mainly driven by lower-than-expected transactions throughout the month.

Total net sales fell 8.3% to $73 million. E-commerce sales, however, were a bright spot, rising 10.4%.

Excluding any possible charges, the company now expects fourth quarter loss to be at or near the low-end of its initial expectations for a loss of 3 cents to 6 cents a share.

Hot Topic Inc. reported combined November/December comparable sales: a 2.2% increase, driven by a 1.6% rise in comps at its Hot Topic stores and a 5.5% comp hike at its Torrid stores.
Total net holiday sales increased 4.0% to $177.3 million, thanks to robust sales in torrid concepts stores as well as marginal improvement in the company’s namesake stores.

Further, the company continued to benefit from favorable customer response to the fashion apparel and tee businesses, which largely made up for the drag in the accessories category, analysts said.

Zumiez announced its total sales jumped 15% to $120.3 million, but its comp sales were off by 1% from last year when they rose 10%.

●Ross Stores said it would be raising its fiscal fourth quarter guidance after posting better-than-expected sales and margins. Comparable store sales were up 6% ahead of analysts estimates for only a 2.7% rise. Total sales climbed 11% to $1.28 billion.

“These gains were on top of our most challenging sales comparison of the year and demonstrate the ongoing resilience of our off-price model,” said Michael Balmuth, vice chairman/ceo.

Looking ahead, the company indicated better-than-expected sales and margin trends as it raised its earnings projection to between $1.05 and $1.06 a share, up from its November projection for 99 cents to $1.04 a share.

The company also expects January same-store sales to increase 1% to 2%.

● Stein Mart Inc. reported its comparable store sales increased 5.9% during in December and 6.3% for the holiday selling period in November/December.

Total sales grew 6.4% to $176.5 million with sales increasing in every state and California and Florida performing best.

●TJX Companies raised its fourth quarter and fiscal year forecasts after posting stronger-than expected comparable store sales. Easily topping analysts’ projections for a 2.3% comp store increase, the company reported a 6% increase on top of an 8% increase last year.

Total net sales were up 10% to $3.6 billion, up 10% from $3.3 billion. The off-price retailer credited its increased profits for more than a year to its appeal to budget-conscious consumers worried about a slow economic recovery.

TJX now projects its fourth quarter earnings to be in the range of 77 cents to 78 cents a share, up from its previous forecast for 72 cents to 75 cents.

●Costco Wholesale Corp. said its comp sales rose 9% beating analysts’ estimates for a 6.5% increase. Excluding gasoline sales and foreign currency fluctuations, Costco’s comp sales rose 8%. Total net sales rose 12% to $11.2 billion.

“This year’s December retail month had one additional day compared to last year … As a result, December total and comparable sales results benefited by approximately 2%,” said David Sherwood, director of finance and investor relations.

Higher fuel prices and a weaker dollar also had a positive impact on comparable store sales, Costco noted.

 

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