=WSJ.COM WRAP:Retailers Saw Slim Gains In Holiday Season
01/05/2006
Dow Jones News Services
(Copyright © 2006 Dow Jones & Company, Inc.)
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
NEW YORK (Dow Jones)--Shoppers were selective on Christmas purchases, either splurging on a few hot items or holding out for steep discounts, resulting in modest December sales for most retail chains.
Many retailers struggled last month, as shoppers appeared to put off their buying until even later than in the past. There were a number of factors at play, including Hanukkah falling particularly late this year, on Dec. 25, and the New York City transit strike, which occurred in the critical final days before Christmas, hurting retailers in Manhattan.
Gift-card sales were also likely to push December business into January or even later; gift card sales are only recorded when they are redeemed.
Wal-Mart Stores Inc. (WMT), the world's largest retailer, said December same-store sales - or sales at stores open at least one year - increased 2.2%. That was at the low end of its earlier forecast for a 2% to 4% gain, and was Wal-Mart's lowest December gain in five years. Comparable sales rose 1.9% at the Bentonville, Ark., company's flagship Wal-Mart stores and 3.6% at its Sam's Club discount outlets.
Among other discounters, Costco Wholesale Corp. (COST) posted a 7% gain in same-store sales.
Gains at some mall-based stores were slight. Bebe Stores Inc. (BEBE) said same-store sales rose just 1.1%, while comparable sales at Limited Brands, whose Victoria's Secret and Bath & Body Works chains rely heavily on holiday gift items, rose 3%. Pacific Sunwear Inc. (PSUN) said same-store sales rose 1%. Talbots Inc. (TLB) had a 1.1% gain in same-store sales.
But other chains, particularly teen apparel retailers, reported large advances for December. Abercrombie & Fitch (ANF) said comparable sales shot up 29%, while The Wet Seal Inc. (WTSLA), which has posted strong monthly gains for much of the past year, said same-store sales soared 38.5%. Wednesday, American Eagle Outfitters Inc. (AEOS) announced a 9.8% same-store sales gain and Aeropostale Inc. (ARO) posted an 11.4% jump.
Gap Inc. (GPS) continued to struggle. Its same-store sales fell 9% last month amid weakness at all three of its brands. But Sabrina Simmons, the company's senior vice president, treasury and investor relations, said in a news release that "we are pleased that fewer markdowns in the month resulted in merchandise margins slightly above those of last year."
Luxury department stores fared well. Nordstrom Inc. (JWN) said same-store sales rose 7.7% in December, well ahead of the First Call average expectation of 3.8% growth.
Federated Department Stores Inc. (FD) posted same-store sales growth of 3.4% for December, as key components of the company's apparel and accessories businesses performed "very well."
Continuing trends that persisted through most of 2005, retailers controlled their inventories well this Christmas amid a lack of hot, new fashions, toys and electronics. But despite wintry weather, many stores were forced to mark down holiday goods including coats and sweaters to get them moving.
December's small gains may be reflective of an uncertain consumer. Michael Niemira, chief economist at the International Council of Shopping Centers, said consumers' incomes have been adequate to support a modest shopping habit, Niemira says persistently sluggish growth in the job market and wages are having a tough time offsetting mounting credit-card debt, interest rates and energy prices. Home values, which financed much of the consumer-spending boom of the past few years, are now a fresh source of uncertainty for shoppers.
"The discounting is likely to be with us until something improves on the job front, and the improvement has to be sustained," Niemira says.
Not everyone agrees that weak results at Wal-Mart and other chains are mainly an economic indicator. Britt Beemer, founder of America's Research Group, a Charleston, S.C., consulting firm, says consumers have shown plenty of evidence they're willing to spend on goods that are enticing, and that retailers with poor holiday sales have their own merchandise to blame.
"If there had been a half a million Xboxes available, they would have sold a half a million Xboxes," Beemer said, referring to Microsoft Corp.'s (MSFT) home video-game console, which sold out early in the season when a batch of about 250,000 were shipped to U.S. retailers.
(James Covert of Dow Jones Newswires contributed to this report.)
For continuously updated news from The Wall Street Journal, see WSJ.com at wsj.com.
(END) Dow Jones Newswires
01-05-06 0835ET
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