Retailers report higher holiday sales
BY MAE ANDERSON Associated Press
Friday, January 04, 2013
1/04/13 at 4:37 AM
NEW YORK - A last-minute surge in spending seems to have saved the holiday shopping season.
Major retailers including Costco, Gap and Nordstrom on Thursday reported better-than-expected revenue in December. That comes as a relief for stores, which can make up to 40 percent of their annual revenue in the last two months of the year.
Americans spent cautiously early in the season because of the damage after superstorm Sandy. Then they held back because of the possibility of the U.S. economy falling off the "fiscal cliff," which would have triggered massive budget cuts and tax increases that would amount to less money in their pockets. But shoppers spent more freely in the final shopping days of the year.
Twenty retailers reported that revenue at stores open at least a year - an indicator of a store's health - rose an average of 4.5 percent in December compared with the same month a year ago, according to the International Council of Shopping Centers. That's on the high end of the expected range of 4 percent to 4.5 percent. Only a small group of stores that represent about 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue, but the data offers a snapshot of consumer spending.
"I wouldn't be doing cartwheels that it was a particularly great or strong holiday season, but it could have been worse given the headwinds," said Ken Perkins, president of RetailMetrics, a research firm. "The government and Mother Nature were not as cooperative as retailers would have liked. But it was definitely not as bad as feared."
December's results provide a brighter picture than reports last month that proclaimed that the holiday shopping season was shaping up to be the worst since 2008 when the U.S. was in a deep recession.
To be sure, the season had multiple fits and starts, with healthy spending during certain periods followed by stretches of tepid sales. Overall, revenue for the combined months of November and December rose 3.1 percent, slightly above the 3 percent rise that the ICSC had predicted.
Sales were weak at the beginning of November in the wake of superstorm Sandy in the Northeast and the U.S. presidential campaign, followed by a surge later in the month during the four-day Thanksgiving weekend. Spending fell off after that until a rush right before and after Christmas when some stores began offering bigger discounts.
Nordstrom, for instance, had a particularly strong December, with revenue at stores open at least a year up 8.6 percent, more than double the 3.4 percent analysts expected. The Seattle-based department store operator said revenue was particularly strong in the last week of the season.
"That last-minute shopping, coupled with post-Christmas bargain hunting and early gift-card redemption, helped propel sales at the end of the month," said Michael P. Niemira, ICSC's chief economist.
While the last-minute promotions may have drawn shoppers, they also ate into stores' profits.
Kohl's said its December revenue at stores open at least a year increased 3.4 percent, beating Wall Street predictions. But the retailer said that the growth came from heavy discounts, and it cut its profit outlook for the current quarter and full year.
Associated Images:
A shopper carries a bag at the Dolphin Mall in Miami, Fla., a few days before Christmas. A last-minute surge in holiday spending helped many major retailers report better-than-expected sales in December. ALAN DIAZ/Associated Press
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