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Holiday shopping a mixed bag for retailers

NEW YORK - The 2004 holiday shopping season turned out to be a bumpy one, with last-minute shoppers giving some retailers solid results but other storeowners struggling to a disappointing finish.

It was hard to discern a trend Thursday as merchants reported December sales, the final assessment of the holiday season. Costco Wholesale Corp., Target Corp., teen retailer Abercrombie & Fitch Co., Federated Department Stores Inc., and upscale stores like Neiman Marcus Group Inc. surpassed Wall Street projections but Sears, Roebuck and Co., Gap Inc., Pier 1 Imports Inc. and May Department Stores Co. were among the disappointments.

Wal-Mart Stores Inc., which stepped up discounting after a slow start to the season, posted a decent but not outstanding 3 percent rise in same-store sales, or sales at stores open at least a year. That was a slightly higher than Wall Street's forecast.

"The Christmas season was just okay, clearly salvaged by the last-minute shoppers and steep discounting," said Ken Perkins, an analyst at RetailMetrics LLC, a research firm in Swampscott, Mass. "Stores that have been struggling over the last couple of months appear to be continuing that trend. And for stores that have been doing well over the last several months, December was a good month."

Perkins noted that two-thirds of the 65 retailers that reported sales Thursday beat Wall Street's modest sales estimates, a reversal of November's results.

But the heavy discounting needed to bring consumers into stores came at the expense of profits, prompting retailers including Target and Pier 1 to cut fourth-quarter earnings projections, according to Todd Slater, a retail analyst at Lazard Freres & Co.

The International Council of Shopping Centers-UBS same-store sales tally of 77 retailers for December rose 2.7 percent, which was below the reduced forecast of 3 to 3.5 percent.

That means same-store sales for the combined November-December period were up 2.3 percent, below the 2.5 to 3 percent forecast, according to Michael Niemira, chief economist at the association. November's final same-store sales tally was up a 1.8 percent.

The holiday performance was weaker than the 4 percent gain posted in 2003, and in line with the holiday 2000 and 2001 seasons, which averaged a 2.3 percent gain.

Still, as Niemira noted, the holiday season "had a lot of things going on," making it difficult to measure its success.

[Last modified January 7, 2005, 01:29:20]