Yule Green : Joy to Retailers’ Profits World in a Strong Christmas Season

The Christmas shopping season proved the best in nearly two years for the nation’s largest general retailers with most stores posting strong December sales gains.

“It turned out to be a good Christmas,” Jeffrey Edelman, a retail industry analyst with the investment firm Drexel Burnham Lambert Inc., said after the retailers announced their results today.

“Sales were better than we expected,” Edelman said.

Analysts estimated industrywide sales rose in a range of 6% to 7.5%, an improvement over the 6% gain forecast before the start of the season.

Despite the strong showing in December, many retailers have had trouble keeping up with inflation over the course of fiscal 1988. Inflation grew at a rate of 4.4% for much of the year.

Jeffrey Feiner, an analyst with Merrill Lynch & Co., said the tone of business was vastly improved over the disappointing Christmas 1987 season, when retailers were forced to slash prices in order to lure customers. This year, there were fewer markdowns, he said.

Feiner predicted retailers would post earnings increases of 10% to 15% for the fourth quarter. The final quarter is crucial for retail companies because they generally earn half their annual profits during this period.

Strong gains were evident in all segments of the industry, even at the higher end of the economic scale. Neiman-Marcus Group Inc. said sales at its stores open at least a year--known as same-store sales in the industry--were up a strong 12.2% from December, 1987.

And apparel retailers continued their comeback from a year-long sales slump. Limited Inc., a leading clothing retailer, said its same-store sales soared 28%.

Analysts said the industry benefited from changes in the calendar, which added two days to the shopping season this year. But they also said consumers--who had spent cautiously for nearly two years--appeared more confident about the economy and their finances.

However, industry watchers were split over whether the spending surge would continue into 1989.