Retailers see better holiday sales

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Published: January 7,2010

Tags: consumer confidence, consumer spending, retail

NEW YORK (AP) – Last-minute holiday shoppers brought relief to the nation’s retailers, handing them modest sales gains for the holiday season and prompting several to raise their fourth-quarter profit outlooks.

The improved profit picture comes because retailers never had to resort to drastic price-cutting after keeping inventories lean.

Still, retailers may be facing chilly months ahead as consumer spending is expected to remain muted amid high unemployment and tight credit, though the slowdown in job losses may help.

“The holiday season was decent but nothing you can get excited about. And it was saved by a last-minute surge,” said Ken Perkins, president of research firm RetailMetrics. “Santa didnt’ deliver coal, but he certainly didn’t deliver caviar.”

As merchants reported results Thursday, warehouse club operator Costco Wholesale Corp., Target Corp., Macy’s Inc. and Children’s Place Retail Stores Inc. all reported increases.

Even Sears Holdings Corp., which operates Kmart and Sears, Roebuck and Co., eked out a small gain and offered fourth-quarter guidance that’s sharply above Wall Street estimates. Macy’s Inc. and Limited Brands are among retailers raising profit outlooks.

Stragglers included jewelry chain Zale Corp., which reported a sharp sales decline but it said it maintained discipline in discounting.

According to Thomson Reuters’ preliminary findings, eight retailers beat expectations, one met, and four missed estimates. The sales figures are based on sales at stores open at least a year and are considered a key indicator of a retailer’s health.

Perkins noted that stores will be remain cautious about their outlooks for this year because “the consumer is still very strapped. … “She’s still rebuilding her balance sheets,” he added.

Retailers’ decent performance in December, helped by a last-minute spending spree in the days before Christmas, comes after a disappointing November.

Retailers managed to avoid another Christmas catastrophe because they had a year to plan for a new consumer mindset. They headed into the season with sharply lower inventories and more practical merchandise that resonated with shoppers who stuck to shopping lists and researched deals online before they bought.

Shoppers were in malls buying, but they were choosy. They picked up discounted flat-panel TVs, computers and smart phones, bought boots, but often stayed away from clothing unless it was practical like socks and coats.

Stores were on edge until near Christmas because consumers delayed their buying more than last year, either because they were shut in by winter snowstorms or were holding out for better deals.

But many stores kept to their planned discounts and didn’t panic. That’s a big difference from last year, when stores were forced to start liquidating merchandise in November amid a freefall in spending because of the escalating financial crisis.

Shoppers’ frugal behavior showed up in retail sales figures released Thursday, with discounters faring the best.

Costco said Thursday that higher gasoline prices and a weaker dollar helped generate 9 percent gain in December. That’s above the 7.9 percent increase analysts polled by Thomson Reuters.

Target said that sales at stores opened at least a year rose 1.8 percent, better than the 0.2 percent decline that analysts had expected. It said that it expects its fourth-quarter earnigns to “meet or exceed” analysts expectations of $1.11 per share.

Wal-Mart Stores Inc., the world’s largest retailer, no longer releases sales figures on a monthly basis.

Sears Holdings reported a 0.4 percent rise in sales at stores open at least a year for December, fueled by a 5.3 percent increase at its Kmart stores as shoppers snapped up toys, home goods and clothing.

Children’s Place, helped by a surge in online sales and improved results at its domestic stores, had a 4 percent gain. Analysts had expected a 4.8 percent drop.

Macy’s sales rose 1.0 percent in December, a bit higher than the 0.8 percent estimate.

But Limited, the operator of Victoria’s Secret and Bath and Body Works, had a 2 percent drop in sales at stores opened at least a year, sharper than analysts had expected. Analysts had expected a 1.5 percent decline.

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