Friday, December 5, 2003

Hard numbers dim retail hopes for happy holiday

By Anne D'Innocenzio
The Associated Press

NEW YORK - Hopes for a robust holiday shopping season faded Thursday after the nation's retailers reported mixed results for the Thanksgiving weekend and all of November.

Retailers and analysts had been optimistic that the improving economy would give holiday sales a big lift. But after the release of November's largely disappointing sales figures, retailers are under more pressure to get shoppers to spend more freely in the weeks before Christmas.

Initial reports indicated an upbeat start to the holiday season. Those results came from mall operators and analysts who examined preliminary sales data.

But as retailers reported their first solid results for the season, Wal-Mart Stores Inc. reported a modest gain during November. Target Corp. and Costco Wholesale Corp. recorded big increases that pleased Wall Street - but most department stores struggled.

Upscale retailers were among the strongest performers, with Saks Inc., Neiman Marcus Group and Nordstrom Inc. reporting sales that beat expectations. Gap Inc. continued its upward sales momentum.

Cincinnati's Federated Department Stores reported that same-store sales fell 0.1 percent in November. Total sales of $1.460 billion for the month were off 0.8 percent compared with the same period last year.

"It is a mixed performance - even within categories - that underscores where we are in November, and probably through December," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd.

"What we actually need to see is that the middle- to low-end consumer start to step up purchases," he added.

The Bank of Tokyo-Mitsubishi's same-store sales tally of 74 retailers was up 3.6 percent, slightly below Niemira's forecast of a 4 percent gain.

That led Niemira to lower his same-store sales forecast for the holiday season to a 4 percent gain from 4.5 percent. That would still be the strongest since 1999, when the tally rose 5.4 percent.

Merchants that heavily discounted last weekend were the winners; those that tried to wean consumers away from big markdowns found the strategy didn't work.

Economic data have been generally positive recently.

How the retailers performed

November same-store sales reported by the five largest retailers (sales compare the current year's sales with those of the previous year at stores open at least a year):

Wal-Mart Stores, up 3.9 percent.

Target, up 6.2 percent.

J.C. Penney, down 0.8 percent (J.C. Penney stores only).

Sears, Roebuck and Co., down 3.6 percent (domestic stores only).

Gap, up 6 percent (domestic stores only).

(Kmart, the third-largest retailer, which emerged from bankruptcy in May, does not report monthly sales.)

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