Two big discount chains posted holiday sales numbers yesterday that pleasantly surprised Wall Street, raising hopes that the 2004 Christmas shopping season will end up being a respectable one for merchants.
Helped by after-Christmas shoppers with gift cards in hand and willing to spend more money in its stores, Wal-Mart Stores Inc. said sales at locations open at least a year would be up 3 percent in December. Last week, the world's biggest retailer said it was looking for a 2 percent gain in same-store sales.
Still, at least two retail observers scoffed at Wal-Mart's holiday performance.
"That's like a baseball player saying, 'I hope to hit a single this week,'" said Britt Beemer, chairman of America's Research Group.
"It wasn't too many years ago that Wal-Mart talked about increases of 4 percent to 6 percent. I look at this and say, 'I'm glad they met their low expectations,'" Beemer said.
J.B. Hanauer & Co. retail analyst Eric Beder concurred: "If you had asked Wal-Mart in August whether plus 3 percent would be a good December, I don't think they would have said yes."
Meanwhile, Kmart Holding Corp., which expects to acquire Sears, Roebuck and Co. by spring, experienced a 4.6 percent slump in same-store sales in November and December.
Still, Kmart pointed out that the bleeding of its market share is abating. In its fiscal third quarter, which ended Oct. 27, Kmart's sales had dropped 12.8 percent.
Much of the suspense about the 2004 holiday season will end Thursday, when many publicly traded retailers are to release their top-line numbers for December.
"We're looking for most companies to hit their plan," particularly those in the luxury sector, Merrill Lynch & Co. analyst Daniel Barry said in a conference call yesterday afternoon.
Target Corp. said it remains on track to post a comparable-stores sales gain of 3 percent to 5 percent.
"By any measure, Target remains the clear winner - comps wise - in the discount department store sector," Hanauer's Beder said.
Carl Steidtmann, chief economist for Deloitte Research, doesn't expect any surprises either - despite what he said is an attempt by the mainstream media to portray the season as a disaster.
The last two weeks of the holiday, in particular, were respectable, Steidtmann said in a conference call.
Retail watchers, Steidtmann cautioned, should get accustomed to the gift-card phenomenon consistently shifting sales to late December or even January and February. Gift cards aren't counted as sales until they're redeemed.
Gift cards account for 8 percent of purchases during the holidays, but Steidtmann believes their share could ultimately grow to 15 percent.
Also complicating retailers' holiday sales performance is the surge in online sales, which typically aren't included in same-store sales numbers.
Nielsen NetRatings said yesterday that U.S. online shoppers spent $23.2 billion, excluding travel, during the 2004 holiday season - up 25 percent from the corresponding period last year.
In fact, the clearest picture of retailers' holiday sales performance might not emerge until next month. That's when merchants divulge their bottom line results, too, revealing the degree to which Christmas discounting cut into their bottom lines.
Generally, Ann Taylor Stores Corp., Gap Inc. and Limited Brands Inc. are all expected to face pressure on their margins because of aggressive holiday discounting they conducted to generate traffic, analysts for Deutsche Bank and Merrill Lynch said.
In contrast, retailers who were less promotional than the pack during holiday 2004 included American Eagle Outfitters Inc. and Abercrombie & Fitch Co.
The National Retail Federation is sticking with its forecast that retail sales, including those of independent merchants, will rise 4.5 percent in November and December. That's down from the 5.1 percent gain in 2003.
The International Council of Shopping Centers is looking for a 2.5 percent to 3 percent rise in sales by chain stores.
The Chicago Tribune is a Tribune Publishing newspaper.