2 Big Retailers Expect to Post Gains

Wal-Mart Stores Inc. on Monday estimated that a surge in after-Christmas shopping spurred December sales gains of 3%. Kmart Holding Corp. said it expected to report that profit rose 10% during the holiday season after it limited deep discounts.

Wal-Mart last week said the increase in its December sales at stores open at least a year was running in the middle of the 1%-to-3% range it had forecast.

Troy, Mich.-based Kmart, the No. 3 U.S. retailer, said Monday that it expected to post profit, excluding real estate sales gains and bankruptcy-related expenses, of about $250 million for the two months ended Dec. 29. Kmart said it anticipated reporting a 4.6% decline in comparable-store sales for the period. But the decline was at a sharply lower rate than earlier in the year.

Gift card redemptions at Wal-Mart increased significantly from last year, helping lift sales, the Bentonville, Ark.-based company said. Kmart and other retailers kept inventory low during the holiday season to limit the need for discounts.

Shares of Wal-Mart rose 53 cents, or 1%, to $53.35 on the New York Stock Exchange. Kmart shares climbed $1.15, or 1.2%, to $100.10 on Nasdaq.

Their news boosted the retail sector on hopes that other retailers would also report better-than-expected December sales this week after a sluggish start to the holiday shopping season.

Shares of Hoffman Estates, Ill.-based Sears, Roebuck & Co. climbed 57 cents to $51.60, and No. 2 U.S. department store company J.C. Penney Co. rose 2 cents to $41.42, both on the New York Stock Exchange.

A pickup in purchases in the last two weeks of December helped many retailers make up for a sluggish start to the season. About a third of consumers shopped later in the season compared with last year, according to an International Council of Shopping Centers-UBS survey.

U.S. retailers’ same-store sales in the November-December period are expected to rise 2.5% to 3%, according to the ICSC, a New York-based trade association.

Wal-Mart said sales last weekend, which will be included in January’s results, were higher than forecast. The retailer was able to revive holiday sales in December partly by advertising about two dozen items on which it cut prices or had lower prices than rivals, said Britt Beemer, chairman of America’s Research Group, based in Charleston, S.C.

But a sales gain of 3% “is nothing to write home about,” Smith Barney analyst Deborah Weinswig wrote.