Most Retailers Say Santa Was Good to Them
Christmas treated most of America’s leading retailers fairly well, but the chains that have struggled all year to pay off heavy debts or to revitalize their stores generally were left out in the cold.
December sales figures released by major chains Thursday showed continuing market share gains for such companies as Wal-Mart Stores and Dayton Hudson while the likes of Sears, Roebuck & Co. and Los Angeles-based Carter Hawley Hale Stores suffered.
The overall retailing picture for the crucial holiday season, which accounts for 50% of annual profits for many stores, will become clearer later this month when the federal government releases its December sales report. But on the basis of reports released so far by many major retailers, analysts say the average gains from a year earlier appear to be in the modest range of 4.5% to 7%, roughly in line with earlier predictions.
Those increases barely outpaced 1989’s overall inflation rate of nearly 5%, and are far below the retail gains posted in December, 1988. On top of that, many retailers pumped up this season’s sales totals by attracting customers with price reductions that ultimately are expected to squeeze profits.
“Whatever gains were achieved--and they were fairly meager--were achieved at the price of steep markdowns,” said Kurt Barnard, a retailing newsletter publisher.
Still, the traditional year-end surge in business generally buoyed the spirits of an industry that has recently seen, among other things, the liquidation of the B. Altman chain and the struggle of the Campeau Corp. department store companies to avoid bankruptcy.
“This was a very satisfactory Christmas season,” said analyst Monroe Greenstein of Bear, Stearns & Co.
Edward F. Johnson, who tracks the retail industry for Johnson Redbook Service, added that business almost always comes through for retailers during the holiday season.
“One retailer told me that there are only two types of Christmases: good and very good,” Johnson said. “This was somewhere in between.”
To assess the December winners and losers among retail chains, analysts focused on the performance of stores that have been open more than a year. Sales at new stores, they explained, often are inflated by special promotions.
Drexel Burnham Lambert’s index of 40 retail companies showed that “comparable store” sales rose 4.4% last month versus December, 1988, when the index climbed roughly 9%.
Sears’ results were among the weakest. The nation’s biggest retailer posted a 1.6% increase in comparable store sales, versus an 8.4% gain a year earlier. Overall, including new stores, Sears’ sales for the month were up 3.6%.
Analysts said Sears was hurt by a general slowdown in spending on big appliances. They also cited the slow start of the Chicago-based company’s “everyday low prices” strategy, an effort to move away from periodic sales in favor of offering consistently low, if not rock-bottom, prices on merchandise.
Carter Hawley Hale, parent of the Broadway in Southern California and the Emporium chain in Northern California, said its comparable store sales were up 3% and its overall sales rose 3.5% in December. Analysts said the company’s sales, which have been lethargic for some time, may still be suffering from October’s Bay Area Earthquake.
Others stores that appeared to fare relatively poorly, analysts said, were the chains owned by debt-heavy Campeau and R. H. Macy & Co. Analysts speculated that the Campeau stores were hurt because their inventory was thinner as a result of the company’s worsening financial problems.
Some discounters and off-price chains were hurt by intensified competition from department stores that offered sharp price markdowns.
But Wal-Mart, the big discounter based in Bentonville, Ark., bucked that trend by posting overall sales gains of 22%. Its same-store sales were up 8%, a healthy gain but not nearly as strong as the 14% increase of a year ago.
MAJOR RETAILERS’ SALES IN DEC.
In millions % of dollars 1989 change Sears 4,696 +3.6 K mart 5,120 +11.8 Wal-Mart Stores 3,630 +22.0 J.C. Penney 2,720 +9.7 Dayton Hudson 2,410 +15.1 May Dept. Stores 1,800 + 8.7 Melville Corp. 1,270 +7.8 Woolworth** 879.0 +11.2 Limited Inc. 915.9 +11.0 TJX * 305.1 +7.5 Montgomery Ward 955.0 + 3.3 Carter Hawley Hale 631.4 + 3.5
* Excludes foreign sales. ** Formerly Zayre
