December Dud: Same-Store Sales Disappoint — As Expected

NEW YORK — Consumers displayed a penchant for penny-pinching this holiday season, as the nation’s retailers Thursday reported same-store sale...

NEW YORK — Consumers displayed a penchant for penny-pinching this holiday season, as the nation’s retailers Thursday reported same-store sale results for December that were disappointing enough to lead several firms to shave their fourth-quarter earnings expectations.

Still, retail observers breathed a sigh of relief that results weren’t even more anemic, and investors, who sent the Dow Jones Industrial Average up 180.87 points, or 2.1 percent, to 8,776.18, propelled the Standard & Poor’s retail index even further as it advanced 3.6 percent to 273.67.

Writing in a research note that she had expected a "Thriftmas," Salomon Smith Barney analyst Deborah Weinswig said, "Our take is things could have been worse, given consumer pressures that range from potential war to high levels of debt."

Steve Skinner, a partner in the retail industry group at Accenture, noted, "I never thought this Christmas was going to be very positive, but most of the results are in line."

Todd Slater, analyst at Lazard Freres, said, "It has been a hellish roller coaster ride for retailers, but it was not a ‘Nightmare on Elm Street.’"

However, Dana Cohen, an analyst with Banc of America Securities, pointed out that, while the results were slightly better than anticipated, plans and expectations were reduced throughout the quarter. "The numbers were so depressed that we are getting a bounce," Cohen said.

Like out-the-door prices and inventory levels, expectations had dropped throughout the holiday season, especially after November’s poor results. However, consumers opened up their wallets a bit late in December, allowing many stores to meet or even beat their modest plans. Even discounters, stellar performers in the poorly received retail melodrama of 2002, had problems making their plans, as discounting was endemic to all retail sectors. With a sea of sameness compounding a paucity of marketable fashion items, department and specialty stores were also denied the holiday cheer for which they’d hoped.

Overall, the Goldman Sachs comp index for December rose a paltry 1 percent, below its 1.8 percent estimate. Discount stores improved 2.3 percent, better than the 2.1 percent expectation but well below the 5.7 percent increase in 2001. Specialty stores escaped with a 0.9 percent increase, less than one-third the 2.8 percent estimate but better than December 2001’s 3.6 percent decrease. Department stores were weakest, falling 2.1 percent against expectations of a 0.5 percent increase but better than last year’s 3.6 percent slump.
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