Retailers Had Happy Holidays After All

Post-Christmas bargain hunters went on a buying spree that gave the nation’s worried retailers a fairly good holiday selling season after all, analysts said Tuesday.

“When the dust settles, what we’ll see is a decent Christmas, one that compared relatively favorably with last year’s performance,” said Michael Niemira, a senior economist with Bank of Tokyo-Mitsubishi in New York. “But it was one that was marked by a very big dichotomy between the winners and the losers.”

The stronger performers appear to have been discount stores, specialty apparel and home-furnishings chains, analysts said. As was the pattern during the full year, middle-market department store chains, and J.C. Penney Co. in particular, seemed to be the biggest losers, Niemira and others said.

Sales at higher-end department stores, which had suffered early in the holiday season, were up sharply after Christmas, as shoppers demonstrated once again that they coveted top-quality designer apparel at rock-bottom prices.

Bank of Tokyo-Mitsubishi reported that the large department stores, such as May Department Stores Co. and Federated Department Stores Co., parent of Bloomingdale’s and Macy’s, racked up almost twice the sales growth that analysts had predicted, thanks to the post-Christmas buying boom, bringing total holiday gains in line with 1997’s 4% to 5% hike over 1996.

Based on strong sales leading up to November, retailers initially were optimistic about the holiday season. But unseasonably warm weather throughout the East and Midwest hurt sales of winter clothing and apparel, causing nervous retailers and analysts to lower their expectations for the holidays.

The return of cold weather in those regions as Christmas drew close and frenzied eleventh-hour shopping by bargain hunters combined to turned the tide for retailers.

“It was not an apparel Christmas until the prices were cut enough in the better department stores to lure shoppers,” said Tom Tashjian, retail analyst at NationsBanc Montgomery Securities in San Francisco. “Interestingly, shoppers were attracted to the better department stores, but sharp price discounts did not lure additional shoppers into Sears or Penney stores.”

Tashjian said the post-Christmas department store gains were unlikely to translate into equivalent profit increases because the volume was fueled by discounts that cut into profits.

Analysts had mixed views on how retailers performed in California. Tashjian said sales in the state probably lagged the rest of the country as the Asian crisis continues to take a toll on certain sectors of the West Coast economy.

Other analysts have projected stronger sales gains in California, based on the state’s healthy employment outlook and economic strength. TeleCheck Services Inc., which compares the dollar volume of buyers’ checks from year to year, reported a modest 1.9% gain for December over last year’s figures, with California showing a 3.3% rise.

Analysts will have a fuller picture of holiday sales Thursday, when many retailers report their December figures.