By ANNE D’INNOCENZIO, AP Retail Writer
NEW YORK (AP) — Many retailers are reporting solid sales gains for December, capping a decent holiday season, but shoppers bent on discounts exacted a high price.
Merchants had to mark down coats and other gifts to get shoppers to buy in a challenging economy. That resulted in a string of retailers, including Target Corp. The Children’s Place Retail Stores Inc. and Destination Maternity, reducing their earnings outlooks.
The heavy discounting is also raising concern about what it will take to get shoppers to spend again in coming months.
As retailers reported their results Thursday, Limited Brands Inc., Macy’s Inc. and Nordstrom Inc. posted strong revenue gains that beat analysts’ estimates. Among the notable laggards was Target Corp., which cut its earnings outlook after a slim sales gain that was below expectations.
The revenue figures are based on revenue at stores open at least a year. That is considered a key indicator of a retailer’s health because it excludes results from stores recently opened or closed.
“Sales were decent, but not great,” said Ken Perkins, president of RetailMetrics, “It was a highly promotional environment. There were clear winners and losers in the holiday season. It just tells you how difficult it was to drive traffic against a backdrop of a soft economy.”
December’s results offer an important benchmark for retailers and economists. During the holiday shopping season, merchants can make up to 40 percent of their annual revenue. The period that runs from November through December also gives valuable insights into what it takes to get Americans to spend in the weak economy.
Clearly, it took a lot of “50 percent off” signs to win over shoppers. For the official start of the holiday shopping season, stores opened as early as Thanksgiving Day, plying shoppers with discounts that resulted in record sales.
But shoppers took a longer-than-usual breather after that. Some stores had to discount more than they had planned in the final days before Christmas to attract shoppers. Post-Christmas bargains were even better. Express stores, for example, promoted an “End of Season” sale, with merchandise prices reduced by up to 70 percent.
Costco Wholesale Corp.’s revenue at stores open at least a year rose 7 percent in December, narrowly missing Wall Street’s expectations. Analysts surveyed by Thomson Reuters predicted that the figure would climb 7.6 percent.
Target, posted a 1.6 percent gain in December as consumers waited until the last minute to shop and electronics sales were weak. The company lowered its fourth-quarter guidance, and its stock tumbled in premarket trading.
Among department stores, Macy’s posted a 6.2 percent increase in December, beating Wall Street’s estimate of 5 percent. For November and December combined, revenue at stores opened for a year rose 5.7 percent. The department store chain raised its earnings outlook.
“Our ongoing success reflects our exceptionally talented organization, which has implemented our key strategies at a very high level in spite of weak macroeconomic conditions,” Terry J. Lundgren, chairman, president and CEO of Macy’s, said in a statement.
Limited, the parent of Victoria’s Secret and Bath and Body Works, said Thursday that revenue at stores open at least a year rose 7 percent in December. The results beat expectations and the company raised its fourth-quarter guidance. Analysts expected a smaller 5.7 percent rise, according to Thomson Reuters.
Nordstrom had a 8.7 percent increase in revenue at stores opened at least a year. That was above the 5.1 percent forecast.
Analysts expected a smaller 5.7 percent rise, according to Thomson Reuters.
The Children’s Place Retail Stores Inc. lowered its earnings guidance for its fiscal fourth quarter on Thursday, saying that higher costs and unseasonably warm weather hurt its performance as it sharply marked down prices to move winter clothing.
(Copyright 2012 by The Associated Press. All Rights Reserved.)