Posted on 01/09/2004 4:51:50 AM PST by Arrowhead1952
Upscale stores benefit most from the end-of-season sales surge
ASSOCIATED PRESS
Friday, January 9, 2004
NEW YORK -- Consumers who kept retailers in suspense for weeks gave many store owners a better-than-expected holiday season after all, coming through at the last minute with a big spending spree and propelling retailers to their best December sales period in four years.
December results issued Thursday by the nation's biggest retailers showed that late shoppers helped companies including Wal-Mart Stores Inc., J.C. Penney Co. Inc. and Target Corp. offset a slow start to the season.
Still, the end-of-the-season sales surge didn't benefit all retailers; Dillard's Inc. and Kohl's Corp. were among the ones dissatisfied with their results.
Dillard's same-store sales fell 4 percent in December, deeper than the 2.9 percent drop anticipated by Wall Street.
Same-store sales are considered the best measure of a retailer's health.
Kohl's same-store sales declined 1.2 percent.
"We are very disappointed with our December sales performance," Kohl's CEO Larry Montgomery said. "The business came very late in the month and at deeper discounts than planned."
Other retailers also only got their sales with heavy markdowns that eroded their profits. Wal-Mart warned Thursday that fourth-quarter earnings might fall at the low end of its projections.
How retailers perform is important because consumer spending makes up two-thirds of the nation's economy.
Upscale stores including Neiman Marcus Group Inc. and Nordstrom Inc. were the star performers, posting sales results that far exceeded expectations.
Luxury retailers have benefited as their customers increased spending because of higher stock market gains and more confidence in the improving economy.
But December turned out to be a pleasant surprise for many department stores and apparel stores such as May Department Stores Co. (which owns Foley's), Federated Department Stores Inc., and Limited Brands Inc., which ended up having a solid month.
Sears, Roebuck and Co. reported sluggish results, but they were better than expected.
"Industrywide, the last two weeks made up a lot of lost ground," said Michael Niemira, chief economist and director of research at the International Council of Shopping Centers. "There was a lot of worry, but in the end, sales came through."
The International Council of Shopping Centers-UBS sales tally of 77 retailers was up 4.2 percent, slightly above Niemira's forecast for a 4 percent gain. At 4 percent, it would be the best holiday shopping season increase since 1999's 5.4 percent.
Gift card redemptions also accounted for the late December sales surge. This year, gift cards generated an estimated 8 percent of holiday sales, according to the National Retail Federation. But retailers weren't able to count the gift card revenue until they were redeemed.
Although clothing and general merchandise retailers had a good holiday, toy merchant Toys "R" Us Inc. said Wednesday that its quarterly profit will fall because of lower-than-expected results. Same-store sales fell 4.9 percent during the holiday season, and the company had to offer steep discounts to compete with discounters such as Wal-Mart, which said toys were one of the strongest categories during the holiday season.
After a slow start caused in part by Northeastern snowstorms, retailers had warned that the season might be disappointing. So stores were counting even more heavily on the final days before Christmas and post-holiday shopping to meet their sales goals.
With the nation's economy coming off a booming third-quarter growth period of 8.2 percent, retailers went into the holiday season with a strategy of limiting discounts and inventories to try to help their profits. But after the slow start, retailers retreated to their discounting ways.
Still, the lower level of discounting might have disappointed some shoppers, who have gotten used to waiting to buy merchandise at 50 percent off or more, said Britt Beemer, chairman of research firm America's Research Group.
"When they were cutting 40 percent, they were barely dangling the carrot out to people who are really discount motivated," Beemer said.
This article contains material from other wire services.
You might want to read posting refresher course, volume II.
Thank you.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
