Happy holidays but a so-so December for retailers
The nation’s retailers scored their best holiday season since 2006, but uneven spending and winter storms across the country disrupted December sales, which came in below expectations.
Even so, the combined November-December period amounted to a solid holiday season, with consumers showing a willingness to spend again. In an encouraging sign, many said they expected to keep shopping in the new year.
“Christmas continues,” said Cheri Hofer, a stay-at-home mom from West Los Angeles, who was at Westside Pavilion this week redeeming gift cards with her 10-year-old daughter, Morgan. “I spent more than I had in the last two years. We spent a lot of money.”
Major chain stores posted a 3.1% year-over-year sales increase last month, according to Thomson Reuters’ tally of 28 retailers. That was slightly below the 3.4% gain that analysts had expected and a surprise given earlier reports from MasterCard Advisors’ SpendingPulse and other groups that pointed to strong consumer spending in December.
Retail industry analysts said the mixed results shouldn’t overshadow the fact that sales rose 4.4% during the two-month holiday season, making it the strongest in four years.
“We have recovered from the recession,” said Michael Niemira, chief economist at the International Council of Shopping Centers. “I’m also optimistic that the underlying storyline for consumer fundamentals will improve this year. That means stronger job growth, more income growth.”
Merchants are expected to make up some of the lost sales this month, and analysts say shoppers are still hitting the stores to take advantage of post-Christmas deals.
At Westside Pavilion this week many shoppers said they were feeling better about the economy and their jobs.
“I tried to spend less, but I don’t think that happened,” said Penni Perrault, a fourth-grade teacher from Valencia who was shopping with her daughter, Paris. “I gave it a good try but I gave up and decided I’d worry about it later.”
Upscale department stores did particularly well last month, with an 11.8% gain at Saks Inc. and an 8.4% rise at Nordstrom Inc. Higher-end teen retailer Abercrombie & Fitch Co. reported a 15% increase.
On the other end of the spectrum, American Eagle Outfitters Inc. posted an 11% sales decline, Aeropostale Inc. saw sales fall 5% and Gap Inc. reported a 3% drop.
“December sales results demonstrated the consumer’s demand for premium brands,” Richard Jaffe, an analyst at Stifel, Nicolaus & Co., said in a note to investors. “In addition, we believe that the early start to the holiday season and the coincident early start to promotional efforts at many retailers this year likely shifted some sales from December into November, contributing to the sequential slowdown in sales.”
Some retail executives expressed disappointment with the so-so results.
Sabrina Simmons, chief financial officer of Gap, said the San Francisco apparel company’s sales and traffic trends were less consistent in December, and Gregg Steinhafel, chairman and chief executive of Target Corp., said consumer buying patterns continued to “exhibit volatility.”
“December sales were below expectations, as strength in grocery and apparel was offset by softness in electronics, toys and some home categories,” he said in a statement. The discounter posted a 0.9% rise, worse than the 4% gain that analysts had expected.
Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health because it excludes the effect of store openings and closings.
Still, retail analysts maintained that the results were solid, especially after two difficult Christmas seasons that saw consumers dramatically pull back on spending.
Many shoppers hit the malls in force again for the holidays, buying more expensive, discretionary items and shopping for themselves. They also swarmed online, where sales recorded double-digit increases.
Hofer, the West L.A. shopper, said she bought more big-ticket gifts this year for her daughters, including a BlackBerry, a Wii console and a large trampoline.
“Things seemed OK, so I wanted to take advantage,” she said.
Other people said they weren’t as lucky.
“I just did enough — where everyone was smiling — but not overboard,” said Monica Howard, 44, a mail handler with the Postal Service. “Nothing has changed really; they say it has, but in households I don’t think it has. I wish I could go and shop.”
Thursday’s results were the latest in a string of industry reports released since Christmas.
This week, Comscore said online retail spending in November and December rose 12% year over year, reaching $32.6 billion and setting a new holiday season record.
Earlier, SpendingPulse said its figures showed that retail sales excluding automobiles from Nov. 5 through Dec. 24 rose to $584.3 billion, a 5.5% gain over the same period in 2009.
