Strong Finish in December Lifts Holiday Retail Sales
Friday, January 6, 2006
The holiday shopping season wrapped up with a strong finish as department stores posted solid December sales gains yesterday and teen-clothing retailers announced double-digit jumps.
Industry experts painted a rosy picture of the season after fretting several months ago that fuel and home-heating prices would result in lackluster sales. Analysts expect the good news to last through the month as shoppers spend their gift cards, which retailers are not allowed to count as revenue until they are redeemed.
"All in all, I think we should feel very good about this season," said Janet Hoffman, director of North American retail for consulting firm Accenture Ltd.
The International Council of Shopping Centers said yesterday that December sales at chain stores rose 3.2 percent over sales in December 2004. The trade group put total holiday sales at a "moderate" 3.5 percent increase over the same period of 2004.
Other industry groups reported better numbers. Market-research firm ShopperTrak said total retail sales grew 4.4 percent in December, compared with the same month in 2004, with the flood of shoppers in the week leading up to Christmas salvaging what it called a "relatively flat holiday season." Meanwhile, Visa USA said charges on its credit and debit cards rose 17.5 percent this holiday season over the same period in 2004.
The trouble spot came from an unlikely source: Wal-Mart Stores Inc. The world's largest retailer came out swinging in November, with blockbuster promotions on the day after Thanksgiving driving shoppers to line up outside its stores in the bitterly cold early-morning hours.
But Wal-Mart lost momentum in the middle of last month, according to Bernard Sosnick, an analyst with Oppenheimer & Co. December sales at stores open at least one year -- also known as comparable-store sales, a key measure of performance for retailers -- rose 2.2 percent for both Wal-Mart and Sam's Club stores and 1.9 percent for Wal-Mart box stores alone.
Analysts said it has become ever more difficult for a behemoth such as Wal-Mart to continue growing. The December sales figure is within the company's forecast growth of 2 to 4 percent, albeit on the low end.
"The 2004 season revealed that Wal-Mart is not invincible," wrote Sosnick in a note to clients, referring to stumbles the previous Christmas. "The 2005 holiday season did not erase that impression."
Target Corp. said its comparable-store sales rose 4.7 percent last month compared with December 2004, regaining footing after it lagged behind Wal-Mart in November for the first time in 2 1/2 years.
Still, big-box discounters overall posted only moderate gains last month despite their promotions. The ICSC said sales at discounters rose 2.6 percent -- outpaced by department stores.
Nordstrom Inc. reported December comparable-store sales growth of 7.7 percent over December 2004, and J.C. Penney Co.'s sales rose 2.2 percent. December comparable-store sales at Federated Department Stores Inc. increased 3.4 percent. The company recently acquired the Hecht's chain, but its sales are not included in that figure.