Some major U.S. retailers had a tough December, with chains like Target and Family Dollar feeling the pinch as consumers were cautious in their holiday spending.
The economy took a toll on shoppers in the most important quarter of the year for retailers. The holiday season was never expected to be stellar, but even the single-digit growth anticipated by chains and analysts came under pressure as Superstorm Sandy, the ever-present headlines about the “fiscal cliff” and the Connecticut school shootings affected consumers’ moods.
“The consumers’ confidence is off a bit, and I don’t think you can point to a single individual thing. It’s a culmination of things that hit their psyche,” said Madison Riley, managing director of retail consulting firm Kurt Salmon.
Among the chains reporting December sales at stores open at least a year on Thursday, Costco Wholesale Corp stood out with growth that topped expectations. Limited Brands Inc’s sales rose less than anticipated, marking a rare miss for the owner of the Victoria’s Secret chain.
Target said fourth-quarter earnings should meet or somewhat exceed the low end of its forecast. It said the number of transactions at existing stores slipped in the quarter, while the average transaction size increased. Food was its best seller.
Overall, analysts looked for 3.3 percent same-store sales growth for December across 17 chains, down from 4.2 percent growth in December 2011, according to Reuters.
Chains also had a somewhat rough November, with same-store sales up a disappointing 1.6 percent.
Still, Kurt Salmon’s Riley predicted that if the upcoming debt ceiling debate goes better than the Washington wrangling to avoid the cliff, there could be a bigger uptick in consumer spending in 2013.
HITS AND MISSES
Macy’s Inc’s same-store sales were up 4.1 percent, just above the 4 percent analysts expected. But the department store chain lowered its fourth-quarter sales and profit forecasts because the rate of growth in November and December was “somewhat” less than it expected.
Family Dollar Stores Inc’s same-store sales rose about 2.5 percent in December after increasing 6.6 percent in the preceding quarter.
“The holiday selling season proved to be more challenging than we expected as customers faced increasing financial uncertainty,” said Family Dollar Chairman and Chief Executive Howard Levine.
Limited’s same-store sales rose 3 percent versus expectations of a 4.5 percent increase, hurt by flat results at its Victoria’s Secret chain. Limited said its merchandise profit margin came in below its own forecast.
Wet Seal Inc said it expects a fourth-quarter loss at or near the bottom of its prior forecast. Wet Seal, which caters to teens, said same-store sales fell 9.7 percent. Analysts predicted the chain would have the weakest sales of any of the 17 chains reporting, but only anticipated a 5 percent decline.
Costco posted a 9 percent rise in December same-store sales, topping estimates for a 6.5 percent increase, boosted by an additional sales day in the reporting period. Higher fuel prices and a weaker dollar also helped.
(Reuters)
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One Response
There’s a good reason for the drop in sales. Brooklyn Costco, for one, stopped selling fresh Kosher meats and chicken and A&H hotdogs. Also, they stopped selling kosher frozen gefilta fish. What a stupid decision.