Retailers See Increase in Sales Thanks to Last-Minute Shoppers

The San Diego Union-Tribune

Frank Green

January 9, 2004

Jan. 9--Holiday shoppers waited to the last minute to storm the malls in December, turning around what had been shaping up as a not-so-jolly season and giving retailers their biggest gains for the period since 1999.

Major chains and shopping center executives said yesterday that a crush of customers in the days just before Christmas and redemption of a record number of gift cards after the holiday lifted retail sales in December by more than 4 percent compared with the same period in 2002.

"There was a crescendo of last-minute shopping," said Lori Chappell, a spokeswoman at Fashion Valley. "Gift card purchases made up a sizeable portion of sales, so our day-after business was very good."

Wal-Mart, the world's top retailer, said yesterday that comparable-store sales in the five-week period ended last Friday gained 3.9 percent compared with the same period a year earlier, while its Sam's Club membership warehouses saw sales surge by 6.1 percent.

Likewise, Nordstrom said sales at stores open at least a year climbed 9.1 percent, while Ann Taylor Stores and Tiffany & Co. were among retailers who raised their profit forecasts.

Analysts said retailers in San Diego County likely saw better results than in the rest of the state and many other areas across the United States because of the relatively durable economy here.

"I think San Diego will be above the national average," said Bill Speer, president of Speer Consulting in Coronado.

Many retail observers were predicting ho-hum holiday gift-buying in the weeks after Thanksgiving as many chains kept discounting to a minimum. So as the holiday approached, shoppers looking for price-slashing of 40 percent off and more suddenly realized they were in something of a seller's market, Speer said.

"That helped many retailers' numbers," Speer noted.

In a report released yesterday, the International Council of Shopping Centers said U.S. same-store sales gained 4.2 percent in December compared with 2002, while November and December sales combined rose 4 percent.

That's a major improvement compared with sales in the last two months of 2002, which increased by 0.5 percent.

The ICSC report, which surveyed 77 retailers, said wholesale clubs led all retail categories with an 8.6 percent year-over-year rise in December. Costco performed best in the category with an 11 percent increase for the month.

Meanwhile, department stores posted a 1.2 percent increase in December, while discounters showed a 4.1 percent increase, the ICSC said.

Factory 2-U, a San Diego-based off-price apparel chain, said sales for the five-week period ended last Saturday dipped by 10.5 percent.

Luxury retailers led the sales gains as wealthy shoppers benefited the most from tax cuts and the improving economy.

"Customers were more confident than a year ago," Tiffany chief financial officer James Fernandez said on a conference call with investors.

Neil Fiske, chief executive of the Bath & Body Works division at Limited Brands, said December sales were "significantly" above expectations as shoppers snatched up aromatherapy candles, foot scrubs and gift sets of scented bath gels.

"They really spiked far above our expectations," during the last few days before Christmas, Fiske said. The chain reduced the number of promotions during the season by more than half, which helped profits, he said.

Many customers who shop at discounters haven't benefited as much from tax cuts and might be concerned about the possibility of losing their jobs.

That crimped spending at those merchants, as well as midpriced department stores such as Kohl's.

Target's store sales in December rose 4.1 percent, at the low end of its forecast. Sears posted a 0.8 percent decline. Kohl's said sales fell 1.2 percent in December and lowered its fourth-quarter profit forecast.

Toys "R" Us, the largest U.S. toy-store chain, said profits will fall because of lower-than-expected results. Same-store sales fell 4.9 percent during the holiday season, and the company had to offer steep discounts to compete with discounters such as Wal-Mart.

Tiffany boosted its fourth-quarter estimate 2 cents to as much as 71 cents a share after December same-store sales rose 16 percent in the United States. Ann Taylor raised its forecast to a range of 54 cents to 56 cents a share, up from 43 cents to 45 cents, because shoppers bought more coats and accessories at full price.

Luxury retailers have benefited as their customers increased spending because of higher stock-market gains and more confidence in the improving economy.

Neiman Marcus Group said sales climbed 15 percent. Sales at Saks rose 5.1 percent, helped by a 9.6 percent gain at its Saks Fifth Avenue stores.

"There are a lot of people trading up, the middle people sending the Tiffany or Coach gift rather than something that's a little more lower end," said Brian Holland, who helps manage about $4 billion at Boyd Watterson Asset Management in Cleveland.

--Bloomberg News contributed to this report.

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(c) 2004, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News