Retailers Report Modest Boost in December Sales
The nation’s major retailers reported moderate sales gains in December, coming out ahead once again in the waiting game played each Christmas with shoppers who stall purchases until the final days of the season.
“The consumer shopped very late. He shopped furiously in the last week and even after Christmas,” said Walter Loeb, a retail analyst with the Morgan Stanley & Co. investment firm. “I think he felt a little guilty about not buying anything and guilt overcame common sense in the end.”
Christmas season sales nationwide got off to a very slow start, although some West Coast retailers reported better sales than some of their counterparts in other parts of the country. The Christmas season is crucial to retailers because it can account for up to one-third of sales and half of profits each year.
Sales increases among major retailers for the five weeks ended Jan. 3 ranged from 1.4% reported by J. C. Penney to 36% recorded by Wal-Mart Stores, whose totals were aided by several store openings during the year. At Wal-Mart stores open more than a year, sales rose 8%.
“We would describe December as a good month, just about on our plan,” said Philip M. Hawley, chairman and chief executive of Los Angeles-based Carter Hawley Hale Stores, parent of the Broadway, Neiman-Marcus and Contempo Casuals. “I think all the indications are that we had an excellent profit improvement and we are right on our game plan.”
“It turned out to be an OK Christmas--not spectacular,” said analyst David Jackson of Morgan, Olmstead, Kennedy & Gardner.
Retailers turned to fewer promotions in 1986 than during 1985’s bleak Christmas, and deep price markdowns started the week before the holiday rather than two weeks before as they did in 1985, said Monroe Greenstein, an analyst who follows retailers for Bear, Stearns & Co. As a result, “profits for the industry as a whole probably will be higher, but some will be lower,” he said.
For instance, Dayton Hudson, which owns Mervyn’s and Target stores, said it is expecting lower fourth-quarter earnings than a year ago. “We were looking for a good but not great Christmas,” Chairman and Chief Executive Kenneth A. Macke said. “The business came late in the season and the climate was very promotional.”
Reason for Suspicion
William Smith, an analyst with Smith, Barney & Co., said: “Most retailers came in at or near (their) plan--probably more near than at. “ Although retailers claim they resorted to few markdowns other than those they had planned, Smith said, “you have to be a little suspicious.”
Big sellers during the holiday season were apparel, appliances, electronics and decorative items for the home. Dayton Hudson noted that silver jewelry was popular and Carter Hawley Hale saw heavy sales of women’s specialty-size apparel, young men’s clothing and, among other things, cookie jars shaped like automobiles.
Hawley disputed the oft-repeated contention that consumers are shopping later every Christmas. Company research found that in 1980, the last time Thanksgiving and Christmas fell on Thursdays as they did in 1986, consumers started shopping at the same time as they did in 1986, he said.
“We were able to predict our sales amazingly closely,” Hawley said.
Elsewhere in the retailing arena, toy sellers and manufacturers had a generally lackluster year because of the lack of many hot new toys.
Coleco Industries, for example, told shareholders Thursday that it is expecting a “very large loss” for the fourth quarter and the full year thanks to significantly lower sales and earnings from its Cabbage Patch Kids line. On the other hand, toy retailer Toys ‘R’ Us said Monday that its overall sales for the eight-week Christmas season rose 26.8% while sales at stores open more than a year rose 12%.
Some consumer electronics retailers reported brisk sales in December.
Bright Note
Federated Group, based in the City of Commerce, said Wednesday that overall sales rose 23% and comparable store sales increased 11%, including results from three Texas stores closed last Sunday. Circuit City Stores of Richmond, Va., saw its total sales jump 41% while comparable store sales rose 25%.
One particularly bright note for the nation’s major retailers was the success of “purchase-for-purchase” promotions in which a customer could buy a plush toy or other item with a minimum purchase of other merchandise from the store.
Dayton Hudson’s department stores sold more than a million Santabears and its Target division sold “a lot more than one million” of its stuffed Kris Krinkles dogs, said Tom Langenfeld, a spokesman for the Minneapolis company.
The Broadway’s Jingle Bear “was an astounding success,” Carter Hawley Hale spokesman Bill Dombrowski said. The store sold out its supply of 400,000 bears by Dec. 12, he said.
And Chicago-based Marshall Field’s 25 department stores sold nearly 450,000 Mistletoe bears despite a recall of 147,000 of the stuffed animals. “So it was a phenomenal success for us,” spokesman Paul Costello said.
Major Retailers’ Sales in December, Los Angeles Times
In millions Year % of dollars 1986 ago change Sears 3,921 3,742 +4.8 K mart 3,901 3,590 +8.7 J.C. Penney 2,320 2,289 +1.4 May Dept. Stores 1,808 1,641 +10.2 Federated* 1,835 1,706 +7.5 Dayton Hudson 1,670 1,440 +15.6 Wal-Mart Stores 1,690 1,239 +36.0 Woolworth 624 586 +6.5 Montgomery Ward 706 655 +7.8 Carter Hawley Hale 737 689 +7.0
*Excludes supermarket sales. Excludes foreign sales.
