Online merchants basked in the spotlight during the holiday shopping season. But guess who's smiling now?
Bricks-and-mortar merchants, criticized for their old-fashioned ways, lured large crowds of shoppers last month. Almost every category of retailing--including clothing, luxury goods and consumer electronics--performed well as consumers indulged in one of their biggest holiday spending sprees in recent years.
The Bank of Tokyo-Mitsubishi retail sales index climbed 6.6 percent in December compared with the same month the year before, surpassing economists' forecasts of between 5.5 percent and 6 percent.
"This season surprised me," said Michael Niemira, an economist with the Bank of Tokyo-Mitsubishi Ltd. in New York. "I was looking for a decent Christmas, but not this good. Now, it turns out to be the best since 1992."
In a reversal of fortunes, Wall Street analysts are raising fourth-quarter earnings estimates for traditional retailers such as jeweler Tiffany & Co. while taking a more critical look at Web-only retailers such as Amazon.com Inc., which announced Wednesday that it would lose more money than forecast despite a 157 percent increase in sales.
"Everybody wants to go dot-this and dot-that," said Peter Framson, a local retail broker and principal with Trammel Crow Co. "The truth is that this was a great year for brick-and-mortar retailers."
Low unemployment, robust financial markets and favorable weather contributed to stronger-than-anticipated performances by retailers such as Wal-Mart Stores Inc. and Federated.
Some economists and analysts also believe that retailers cashed in during the last week of December as year 2000 revelers rushed to buy party clothing and snacks. And while Americans decided that Y2K computer glitches presented no big threat, they may have nevertheless picked up extra bottles of water or battery packs.
The bad news for consumers is that retailers have not been forced to cut prices drastically. That's partly because retailers have had a good sales year and partly because they have become more efficient in 1999, said Mark Vitner, an economist with First Union Corp.
"There are more efficiencies in their distribution [systems], and they've gotten better at having the right goods in their stores," Vitner said.
Among the best performers were Wal-Mart Stores, the world's largest retailer. The Bentonville, Ark.-based discounter said same-store sales, an industry barometer that measures revenue at stores open more than a year, rose 9.1 percent in December, topping expectations.
Federated Department Stores Inc., owner of Macy's, reported a 6.4 percent gain in same-store sales in December, surpassing projections for an increase of up to 5 percent. And benefiting from a surge in luxury spending, Tiffany's U.S. same-store sales rose 27 percent in holiday shopping season.
Other retailers, such as apparel company Talbots Inc. and Sears, Roebuck & Co., have said fourth-quarter earnings will be higher than expected because of healthy seasonal sales.
But even with consumers flocking to the malls, some merchants failed to ring in enough sales.
At J.C. Penney Co. Inc., same-store sales in December were up a sluggish 0.5 percent. Toys R Us Inc. said same-store sales in the nine-week period that ended Jan. 1 fell 2 percent. The toy retailer blamed lower prices for video hardware as well as product shortages.
Retail sales for the holiday season were very strong.
December 1999 retail sales percent change from December 1998
All stores*: 6.6%
J.C. Penney: 0.5%
*Stores open at least a year
**Operates Bloomingdales and Macy's
SOURCE: Bank of Tokyo-Mitsubishi retail chain store Index of 79 retailers