IE 11 is not supported. For an optimal experience visit our site on another browser.

Retailers post strong December sales

A last-minute holiday shopping rush helped major U.S. chain stores salvage December sales, retailers said on Thursday, but a gloomy profit forecast from Wal-Mart Stores Inc. raised concerns that steep discounts eroded earnings.
/ Source: Reuters

A last-minute holiday shopping rush helped major U.S. chain stores salvage December sales, retailers said on Thursday, but a gloomy profit forecast from Wal-Mart Stores Inc. raised concerns that steep discounts eroded earnings.

Luxury stores were the biggest winners, as expected, helped by an improving stock market that has boosted spending power --and confidence -- among wealthier consumers.

Jeweler Tiffany & Co. Inc. posted a 16 percent jump in holiday season sales at U.S. stores open at least a year --known as same-store sales -- and raised its quarterly profit outlook.

Posh department store operator Nordstrom Inc. recorded a 9.1 percent increase in December same-store sales.

Wal-Mart, the world’s biggest company, turned in a 4.3 percent increase in December same-store sales, better than most analysts had expected, but said earnings for the current fourth quarter would likely reach only the low end of expectations.

Analysts, on average, were expecting a fourth-quarter profit of 64 cents per share, the mid-point of Wal-Mart’s forecast.

Wall Street widely expects mid-tier department store chains including Kohl’s Corp. to warn of disappointing fourth-quarter profits as well when they report December sales later on Thursday.

Hefty job losses in the manufacturing sector took their toll on household budgets, crimping demand at discount and middle-market stores.

Retailers also grappled with back-to-back weekend snowstorms across the densely populated U.S. Northeast early in December, prompting many stores to slash prices even more than expected to make up for the slow start.

Heavy demand for plastic gift cards weighed on December sales as well because retailers typically record those revenues when the cards are redeemed for merchandise, and not when they are purchased.

As a result, many retailers are expecting strong January sales as more people spend their gift card balances. Wal-Mart forecast a 3 percent to 5 percent increase for January, which historically has been a quiet month marked by after-Christmas clearance sales.

Despite the big pockets of weakness, analysts still expect a dramatic improvement for the vital December sales period, which is typically the biggest shopping month of the year. The November-December holiday shopping season is likely to show the biggest growth since 1999.

Last year, a stagnant economy, soft job market and poor consumer confidence hurt spending, and the holiday shopping season generated the smallest sales gain in at least 30 years.