Late Holiday Shoppers Give Retailers Something to Celebrate

A last-minute spending spurt by holiday gift buyers helped wrap up a merrier-than-expected December for many of the nation’s retailers, sales reports indicated Thursday.

In many cases, merchants’ sales gains for the five weeks ended Dec. 31 surpassed their own and observers’ expectations for modest increases over a year ago that would have been all but wiped out by inflation.

Among the standouts were the Limited, a specialty retailer of women’s clothing whose sales soared 28% over December, 1987, at stores that have been open at least a year; Wal-Mart, with a 14% comparable-store gain, and F. W. Woolworth, which said its 9.3% increase at comparable stores was the best performance for a December in 20 years.

Other companies with solid results included Neiman Marcus Group, owner of Neiman Marcus, Contempo Casuals and Bergdorf Goodman, with a 12.2% boost at comparable stores; May Department Stores, owner of May Co. California and Robinson’s, with a total gain of 10% at stores open at least a year, and Carter Hawley Hale Stores, parent of the Broadway, with a gain of 7.2%.

“December began all right and ended downright strong,” said William N. Smith, an analyst with the Smith Barney, Harris Upham & Co. brokerage firm in New York. “It was really the best overall month we’ve seen in a while.”

Not everyone’s holiday was so rosy. Store and catalogue sales at J. C. Penney, which headed into the season with overly lean supplies of merchandise, showed a decline of 3.6% for the month at stores open at least a year. But Penney said it would have recorded a gain of 3.5% if sales from discontinued lines, including home electronics, photographic equipment and some sporting goods, had been excluded from its year-earlier results.

And Carson Pirie Scott & Co., based in Chicago, said its flat department store results failed to meet expectations. Overall, the company’s sales at department and specialty stores open at least a year rose 4.3%, with most of the gain accounted for by the County Seat apparel chain.

In many cases, the December figures indicated quite an acceleration over previous months in 1988, for which retailers have been reporting consistently sluggish gains in the low single digits.

Although many individual chains reported exceptional numbers for December, analyst Walter F. Loeb, with the New York investment firm Morgan Stanley & Co., estimated the industry’s overall gain at 7.5%, slightly above forecasts of modest gains of 5% to 7%.

Even so, he said, the figures were cause for cheering. “I was very pleased because (of) the retailers’ clean inventories, low markdowns and tight controls on selling costs,” he said. “I see good momentum into 1989 and good profits for 1988.”

Bernard Sosnick, an analyst at the Deutsche Bank Capital investment firm, agreed that there was “surprise at how well it turned out,” given merchants’ cautious expectations. “If anything,” he said, “the earnings should look better than the sales gains.”

Women’s clothing, sales of which have lagged for the last year, was a healthy performer, said Thomas H. Tashjian, vice president of retail trade for the Seidler Amdec Securities brokerage in Los Angeles.

“Women’s (apparel) came along very strong through the month of December,” he said. The extra couple of shopping days before Christmas, which fell on a Sunday, “showed very strong performance.”

Apparel Sales at K mart

Even K mart, a discount chain that is not really known as a fashion house, said it was “particularly encouraged” by apparel sales. The chain reported a December gain of 6.8% at stores open at least a year. However, an analyst noted that the figure included sales from the weekend after Thanksgiving, a period that many other retailers reported as part of November.

Analysts agreed that the results bode well for profits because merchants with lean inventories were able to hold down price-cutting activity and thereby preserve profit margins. Last Christmas, after the October, 1987, stock market crash prompted consumers to rein in spending, retailers panicked and slashed prices. The markdowns, in turn, cut profits and instilled caution for the 1988 holiday season.

Penney, for one, might have gone “to the other extreme” for the 1988 holiday season by limiting inventories too severely, said Rosalind Wells, chief economist for the National Retail Merchants Assn. and president of Wells & Associates, a consumer research firm in New York. Nonetheless, Duncan Muir, a spokesman for the Dallas-based retailer, maintained that “the markdown picture was considerably brighter this year than last year.”

Sears, Roebuck & Co., the nation’s biggest retailer, also said markdowns were below last year’s level.

The giant company, which is in the early stages of an ambitious shift in its merchandising and pricing strategies, advertised heavily during the holiday season and emerged with a comparable-store increase of 8.4% for the month, much better than analysts and the company had predicted.

“We expected a good Christmas season,” said Chairman and Chief Executive Michael Bozic, “and it was even better than our expectations.” However, year-to-date results showed a sluggish rise of 3.2%.

More Brands at Sears

As part of Sears’ strategy change, it plans to sell more brand-name merchandise to satisfy customers’ demands. It announced Thursday that 726 of its stores will next week unveil departments carrying carpet under such names as Du Pont Stainmaster and Monsanto Wear-Dated.

Analyst Smith of Smith Barney said the “black cloud inside the silver lining” of December’s results would be concerns that the government might force interest rates higher to cool spending. Certainly in December, he said, “the consumer was not being effectively choked off by interest rates.”

THE CHAIRMEN SPEAK Joseph E. Antonini, K mart Corp. “Apparel sales were especially strong during the Christmas selling period, with gains realized in all major classifications. We are particularly encouraged by the strength in ladies’ wear.” Michael Bozic, Sears Merchandise “We expected a good Christmas season, and it was even better than our expectations. The results are especially gratifying because merchandise markdowns were below last year’s level.” David C. Farrell, May Dept. Stores “We are pleased to report outstanding holiday sales across the company. Every one of our operating companies achieved sales well in excess of both last year and plan.” Philip M. Hawley, Carter Hawley Hale “The December sales gain of 8.2% was quite satisfactory, and the combined December-November gain of 6.3% was good. Business was well balanced across all divisions and merchandise categories.” Kenneth A. Macke, Dayton Hudson Corp. “Sales were strong and inventories were under good control. Much of the business came in the final days before the holiday, fueled by the two extra shopping days this year.” MAJOR RETAILERS’ SALES IN DECEMBER

In millions % of dollars 1988 change Sears 4,609 +12.1 K mart 4,577 +10.7 J.C. Penney 2,480 -1.5 May Dept. Stores 2,300 +30.0 Dayton Hudson 2,240 +12.6 Wal-Mart Stores 2,967 +31.0 Woolworth * 790 +14.7 Montgomery Ward 804 +7.6 Carter Hawley Hale 521 +8.2

* Excludes foreign sales.