Late December Sales lift Retailers

(ICharter) NEW YORK -- Consumers who frustrated retailers through the early part of December gave many storeowners a respectable holiday season after all, coming through at the last minute with a spending spree right before and after Christmas. Even struggling department stores ended up with solid results.

December sales figures issued Thursday by the nation's biggest retailers showed that procrastinators and post-Christmas shoppers helped companies including Wal-Mart Stores Inc., J.C. Penney Co. Inc., and Target Corp. offset a slow start to the season.

Still, the end-of-the-season sales surge didn't benefit all retailers; Gap Inc. and Kohl's Corp. were among those dissatisfied with their results.

Evansville-based Shoe Carnival, which saw same-store sales drop 3.8 percent, revised fourth-quarter earnings guidance.

"The late surge in sales was not enough to offset the sales declines of the first three weeks of December," said Mark L. Lemond, president and chief executive officer.

Based on the declining sales in November and December and expected flat sales in January, Shoe Carnival expects fourth-quarter earnings to range from a 1-cent loss to a 2-cent gain per diluted share.

Its stock dropped 83 cents to $15.95 in trading Thursday on the Nasdaq stock market.

The retail report gave a moderate boost to market sentiment before the opening bell and overshadowed a relatively poor reading on the job market, leading investors to put aside trepidation that had been building this week about today's report on employment, which could set the tone for sentiment about the economy in coming days.

The advance carried the Nasdaq composite index to its first close above 2,100 in 21/2years. It advanced 22.57, or 1.1 percent, to 2,100.25.

The Dow Jones industrial average closed up 63.41, or 0.6 percent, at 10,592.44, its highest close since March 2002. The Standard & Poor's 500 index rose 5.59, or 0.5 percent, to 1,131.92, its highest close since April 2002.

"It seems that the good earnings news forced people into the market and overshadowed the jobless data," said Todd Clark, head of listed equity trading at Wells Fargo Securities.

Some retailers got their sales with heavy markdowns that eroded their profits. Wal-Mart warned Thursday that fourth-quarter earnings may fall to the low end of projections.

Upscale stores including Neiman Marcus Group and Nordstrom Inc. were the star performers, posting sales results that far exceeded expectations.

December also turned out to be a pleasant surprise for May Department Stores Co., Federated Department Stores Inc. and many mall-based apparel stores including Limited Brands.

Sears, Roebuck and Co. reported sluggish results, but they surpassed Wall Street forecasts. Sears, which reported sales were down 0.8 percent, saw its stock rise $1.21 to $46.19 on the New York Stock Exchange.

TJX Cos., operator of T.J. Maxx and Marshalls, rose 58 cents to $22.16 after reporting a 4 percent rise in same-store sales. The company said foreign exchange gains also bolstered its results.

"I was pleasantly surprised. The numbers were strong across the board," said Ken Perkins, research analyst at Thomson First Call, whose tally of 82 stores' sales was up 4.2 percent last month.

The tally is based on what the industry calls same-store sales, those from stores open at least a year. They are considered the best measure of a retailer's health.

Sales hit the mark

"Industrywide, the last two weeks made up a lot of lost ground," said Michael P. Niemira, chief economist at the International Council of Shopping Centers. "There was a lot of worry, but in the end, sales came through."

The International Council of Shopping Centers-UBS same-store sales tally of 77 retailers was also up 4.2 percent, in line with Niemira's 4 percent forecast.

That means same-store sales for the November-December period rose 4.0 percent from a year ago, confirming Niemira's prediction that holiday 2003 would be the best since 1999's 5.4 percent. The holiday 2002 season had a meager 0.5 percent gain in same-store sales from the previous year.

When the 2003 season started, many stores hoped for bigger increases because of the rebounding economy.

That didn't happen. After a slow start caused in part by northeastern snowstorms, retailers warned that the season might be disappointing, and many analysts lowered their forecasts. So stores were depending even more heavily on the final days before Christmas and post-holiday shopping to meet their sales goals.

The still sluggish job market made many consumers wary, and many held off buying until they got the markdowns they wanted.

The Labor Department said Thursday new claims for unemployment benefits rose last week, ending a three-week string of declines. New claims rose to 353,000, up 14,000 for the week ending Jan. 3, compared to 339,000 new applications the previous week. Economists said the increase was likely due to the holidays.

Big retailers' success

Wal-Mart, which reported a December same-store sales increase of 4.3 percent, beat analysts' expectations of 3.3 percent -- but its stock retreated 22 cents to $53.26.

Penney said sales for its department store business rose 4.3 percent, exceeding the 1.3 percent estimate of analysts surveyed by Thomson First Call. Its stock dropped 20 cents to $26.30.

Target Corp., which beat estimates of 3.4 percent with a 4.1 percent increase, saw its stock fall 51 cents to $37.76.

Kohl's 1.2 percent decline was in line with analysts' forecasts, but it cut its fourth-quarter earnings outlook.

Kohl's stock plummeted $3.70 -- more than 8 percent -- to $41.80.

At Federated, same-store sales rose 1.2 percent, compared with a 0.2 percent forecast. May had a 1.6 percent increase, beating Wall Street projections of a 1.8 percent decline.

Limited Brands sales rose 6 percent, versus an estimate of 1.3 percent. But Gap reported a 1 percent same-store sales gain, well below the 5.1 percent Wall Street expected.

Luxury retailers were the big pleasers. At Neiman Marcus, sales increased 12.6 percent, while Nordstrom recorded a 9.1 percent gain.

Saks Inc., which operates Saks Fifth Avenue, turned in a 5.1 percent gain.