Last-minute shopping gave boost to December sales - UPDATE 1

AFX News Limited

January 8, 2004

CHICAGO (AFX) -- It turned out to be a merry holiday season after all as consumers finally pulled their wallets out during the latter half of December to help retailers deliver their best seasonal sales performance since 1999. An eye-popping 74 percent of the retailers tracked by Thomson First Call served up better-than-expected December sales results Thursday as spending sprees in the final days ahead of Christmas were only outdone by a rush of post-holiday shopping. "Consumers have increasingly waited later to shop over the last five years and that trend got strong traction this year," said First Call analyst Ken Perkins. "We also noted the increasing importance of gift cards." Cumulatively, the results rolled in with a 4.2 percent increase in sales at stores open longer than a year -- a key industry benchmark known as comparable-store sales. The results were in line with predictions by the International Council of Shopping Centers but ahead of even the best intramonth average projection reached by analysts surveyed by First Call.

Bogged down as snowstorms and inclement weather kept consumers at home, retailers pulled out the promotional punches in the waning days of the pre-holiday period. That proved helpful to sales, but harmful to profit margins. Wal-Mart recorded a solid 4.3 percent increase in sales, ahead of the 3.3 percent average expectation as derived by First Call. However, the world's large st retailer said earnings for the quarter are tracking toward the low end of expectations as the behemoth turned to aggressive pricing. Analysts have pegged a profit of 64 cents a share, the midpoint of Wal-Mart's range. At Target , sales at Mervyn's stores pulled down the corporation's overall results to the low end of expectations with a 4.1 percent increase. Meanwhile, Kohl's managed to meet diminished projections for a 1.2 percent decline in sales but surprised Wall Street by hacking as much as 20 cents off its earnings forecast for the quarter. Kohl's now sees a profit in a range of 68 cents a share to 70 cents a share, as compared to a consensus of 88 cents as per First Call. "We were very disappointed with our December sales performance," said CEO Larry Montgomery in a press release. "The business came very late in the month and at deeper discounts than planned." Department stores perform well Fashion was at play for many retailers, giving even the usually depressed department-store segment some holiday spirit. "After years of spending on ceiling fans, leaf blowers, new gutters and other sexy home improvement expenditures, there is now a strong wave of demand for personal fashion products," said Bernard Sands analyst Richard Hastings. "This is strong wave that will continue all the way through the current year." Ann Taylor is a strong case in point. The women's-wear retailer turned in a stunning 26.2 percent gain in same-store sales that blew away First Call's 8.2 percent forecast. What's more, total sales zipped up a breathtaking 40.1 percent to $215.9 million for the month. Not surprisingly, Ann Taylor recast its profit projection to a range of 54 cents to 56 cents a share -- the second increase in the quarter.

According to First Call, analysts have been expecting 45 cents a share. As expected, upscale retailers took in high-end sales. Neiman Marcus reported a 12.6 percent gain, better than the 8.2 percent expectation, while Saks and Nordstrom saw sales rise by 5.1 percent and 9.1 percent, respectively, easily beating anticipated increases of 2.8 percent and 4.1 percent. Tiffany , which isn't tracked by First Call, delivered 16 percent gains and raised its earnings outlook as a result. Not all fared as well, however. For example, Gap Inc. reported a measly 1 percent gain, hurt by weak performances at Old Navy and its namesake U.S. stores. Analysts, who might have been too aggressive, were looking for a 5.1 percent rise in same-store sales. And Abercrombie & Fitch took another turn down its path of declining sales, reporting a minus-13 percent sales results. Analysts were expecting sales to fall 10.5 percent. This story was supplied by CBSMarketWatch. For further information see

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