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Stores Report Holiday Season Of Letdowns
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The weather also contributed to weakness at some discount and department stores. December same-store sales at Wal-Mart grew a better-than-expected 1.6 percent. Still, coupled with November's flat sales, the holiday season added up to one of the worst on record for the retailer, according to some analysts.
However, the company said it did well in electronics, particularly in digital televisions, computers and video game systems. Wal-Mart threw down the gauntlet early in the season by slicing prices on key holiday items, such as a 42-inch flat-panel TV and scores of board games. It pumped up spending in marketing and focused relentlessly on low prices this year, hoping to make up the difference in sales volume.
Wal-Mart was not alone in its disappointment. Even Target, its biggest rival, achieved only a modest 4.1 percent increase in December same-store sales. As Christmas neared, many retailers found themselves with racks of merchandise still on hand as shoppers waited for bigger discounts.
"The sales numbers were often hurt by the step-up in promotions as the holiday progressed," said Frank Badillo, senior economist at Retail Forward, a consulting firm. "Retailers sold a lot of product, but it often wasn't at the price points they hoped for."
The big winners last month were luxury department stores. The ICSC estimated that sales for the group grew 8.2 percent over December 2005, the best performance of any sector. At Saks Fifth Avenue, comparable-store sales grew 11.1 percent, driven by women's apparel, shoes and handbags. Nordstrom performed well, with sales up 9 percent.
Federated Department Stores, which owns Macy's and Bloomingdale's, fell short of its sales estimate for the month, with an increase of 4.4 percent. Chief executive Terry J. Lundgren said the firm was struggling with home merchandise, particularly at locations once owned by May Department Stores.
Several big players did not report December sales results yesterday, including Circuit City and Best Buy, which both had long lines and some of the season's hottest items.
Staff writer Martha M. Hamilton contributed to this report.
