KSS 42.04
I may have been a bit premature calling high-end retailers as shorts. But not by enough to be concerned. They'll get hit hard as mkt and economy cools this qtr, throwing their projections off.
Reuters
Last-Minute Shoppers Save U.S. Sales
Thursday January 8, 10:29 am ET
By Emily Kaiser
CHICAGO (Reuters) - A last-minute holiday shopping rush helped major U.S. chain stores salvage December sales, retailers reported on Thursday, but Wal-Mart Stores Inc. (NYSE:WMT - News) and others said deep discounts eroded profits.
ADVERTISEMENT
Mid-priced department store chain Kohl's Corp. (NYSE:KSS - News) was among the hardest hit, warning that its quarterly profit could be as much as 23 percent lower than analysts had expected, because of steep markdowns. Kohl's shares lost more than 6 percent in early New York Stock Exchange (News - Websites) trading.
Apparel chain Gap Inc. (NYSE:GPS - News) was also a disappointment, with December sales well below Wall Street expectations as it reported no growth in its namesake Gap stores. Its stock tumbled 11 percent in early trading on the NYSE.
Luxury stores were the biggest winners, as expected, helped by an improving stock market that has boosted spending power -- and confidence -- among wealthier consumers.
Tiffany & Co. Inc. (NYSE:TIF - News) raised its quarterly profit outlook following surprisingly strong holiday sales. Nordstrom Inc. (NYSE:JWN - News) and Neiman Marcus Group Inc. (NYSE:NMGa - News) also showed strong sales.
Overall, analysts expect a big improvement for the vital December sales period, which is typically the biggest shopping month of the year. The November-December holiday shopping season is likely to show the greatest growth since 1999.
In 2002, a stagnant economy, soft job market and poor consumer confidence hurt spending, and the holiday shopping season generated the smallest sales gain in at least 30 years.
But in the latest holiday season, hefty job losses in the manufacturing sector took their toll on household budgets, crimping demand at discount and middle-market stores.
LOW-PRICED CHAINS HURTING
Wal-Mart, the world's biggest company, turned in a 4.3 percent increase in December same-store sales, better than most analysts had expected, but said earnings for the current fourth quarter would likely reach only the low end of expectations.
Analysts, on average, were expecting a fourth-quarter profit of 64 cents per share, the mid-point of Wal-Mart's forecast.
Wal-Mart's stock edged up 0.6 percent, however, as analysts took investors took solace in the better-than-expected sales.
Rival Target Corp. (NYSE:TGT - News) managed to meet only the low end of its forecast for the month, posting a 4.1 percent same-store sales gain. Demand at its Mervyn's department stores was particularly weak.
Kohl's said its December same-store sales slipped 1.2 percent, matching Wall Street expectations, but slashed its fourth-quarter forecast to a range of 68 cents to 70 cents per share. Analysts had expected 88 cents, according to Reuters Research. Most analysts had already lowered their forecasts amid expectations for a poor December performance.
"The trend that we're seeing is, the retailers with expertise in fashion ... had strong sales," said Bill Dreher, retail analyst with Deutsche Bank.
"It's the women's fashion in the moderate channel that really seemed to miss this holiday," he said. "We are seeing sales under pressure and even greater pressure on the gross margin side."
Sears, Roebuck and Co. (NYSE:S - News), the largest U.S. department store chain, said December same-store sales dipped 0.8 percent, hurt by sluggish apparel demand, although the month was not as bad as most analysts had expected.
"A surge in last-minute shopping and post-holiday clearance activity were not enough to overcome soft comparable-store sales in early December," Sears Chief Executive Alan Lacy said in a statement.
Retailers grappled with back-to-back weekend snowstorms across the densely populated U.S. Northeast early in December, prompting many stores to slash prices even more than expected to make up for the slow start.
Heavy demand for plastic gift cards weighed on December sales as well because retailers typically record those revenues when the cards are redeemed for merchandise, and not when they are purchased.
As a result, many stores are expecting strong January sales as more people spend their gift card balances. |
