* Dec. same-store sales up 4.5 pct vs 3.3 pct analysts' view
* Costco, TJX, Ross, Gap top expectations
* Target, Limited, Wet Seal miss estimates
* Macy's, Kohl's lower profit forecasts
* TJX, Ross raise earnings outlooks
By Jessica Wohl
Jan 3 Several major U.S. retailers beat
expectations of modest sales increases in December as shoppers
wrapped up holiday buying, but overall results were mixed and
only stores that were nimble enough thrived in an uncertain
Costco Wholesale Corp, Nordstrom Inc, TJX
Cos Inc and Ross Stores Inc were among the
winners of the month, while such chains as Target Corp
and Family Dollar Stores Inc felt the pinch as cautious
consumers focused purchases on food and other basics.
Across 17 retailers including discounters, department stores
and apparel chains, December sales at stores open at least a
year rose 4.5 percent, topping analysts' estimates for 3.3
percent growth. The result reported Thursday also topped 1.6
percent growth in November 2012 and a 4.2 percent increase in
December 2011, according to Thomson Reuters I/B/E/S.
Companies like Costco, TJX and Ross "are able to thrive in
whatever economic environment they happen to be operating in" by
adjusting their business models, inventory levels and sales
strategies better than many peers, said Craig Johnson, president
of Customer Growth Partners.
The stronger-than-expected December is likely to help
retailers overcome a softer start to the key holiday season. The
2012 season was never expected to be stellar, but even the
single-digit growth anticipated by chains and analysts came
under pressure as Superstorm Sandy, the ever-present headlines
about the "fiscal cliff" and the Connecticut school shootings
affected consumers' moods in November and December.
With the number of chains that report monthly sales
dwindling in recent years, Thursday's tally offered a limited
snapshot of consumer behavior. Industry heavyweights like
Wal-Mart Stores Inc and sector leaders like consumer
electronics chain Best Buy Co Inc have yet to report
sales for the holiday season.
Retail stocks, which largely missed out on Wednesday's
market rally, rose on Thursday. The S&P 500 retail index
added nearly 1 percent near midday, while the S&P 500
index inched up 0.1 percent.
With the country moving past the fiscal cliff debate,
retailers will be watching whether the expiration of the payroll
tax cut takes a toll on consumer spending.
The expiration of the payroll tax holiday, which this week
raises Social Security taxes for workers to 6.2 percent from 4.2
percent, may be more important to the economy than the income
tax hike for wealthy people, said Michael Wilson, head of
research at Morgan Stanley's wealth management division.
"A two percent hit off the top for the average person is
meaningful," he said. "It will change their spending behavior."
While it was hard to say American consumers were tapped out,
they are "fragile," said Chris Donnelly, global head of
Accenture's retail practice. "It doesn't take much to rattle the
As cautious U.S. consumers try to stick to their budgets, it
remains a very competitive marketplace for retailers, Donnelly
Madison Riley, managing director of retail consulting firm
Kurt Salmon, predicted that if the upcoming debt ceiling debate
goes better than the Washington wrangling to avoid the cliff,
there could be a bigger uptick in consumer spending in 2013.
As retailers finish up their quarter this month, they are
bringing out fresh merchandise while offering deep discounts to
move winter goods.
Michael Niemira, chief economist of the International
Council of Shopping Centers, sees a ho-hum spring selling
season. He expects sales growth in the 2013 spring season to be
weaker than in 2012.
Higher food prices this year mean "a little less
discretionary spending power" for U.S. shoppers, he said.
One bright spot this spring could be home goods. Home
improvement chains such as Home Depot Inc and Lowe's Cos
Inc and retailers selling home goods and furnishings
could benefit as people start to update their homes with the
turn in the housing market, said Customer Growth's Johnson.
HITS AND MISSES
TJX and Ross, which appeal to bargain hunters with
marked-down name-brand merchandise, posted
stronger-than-expected sales and raised their fourth-quarter
But at Barnes & Noble Inc, holiday sales fell
sharply, with a decline in the number of Nook devices sold and
shoppers at its stores.
Kohl's Corp slashed its fourth-quarter profit
outlook, as holiday sales came late in the season at deeper
discounts than planned. Still, its 3.4 percent rise in December
same-store sales topped forecasts.
Gap Inc's December same-store sales topped
expectations. The retailer also said it would buy women's luxury
Target's same-store sales were essentially flat, while
analysts anticipated a 0.8 percent increase. Target said
fourth-quarter earnings should meet or somewhat exceed the low
end of its forecast, but the warning was not as dire as some may
have anticipated, and its shares were up 2.3 percent.
Limited Brands Inc sales rose less than anticipated,
marking a rare miss for the owner of the Victoria's Secret
chain. Limited said its merchandise profit margin came in below
its own forecast. Its shares fell 5.4 percent.
Wet Seal Inc expects a fourth-quarter loss at or
near the bottom of its prior forecast after December same-store
sales fell 9.7 percent, the steepest decline among the 17
chains. Its shares were flat.
Family Dollar's same-store sales rose about 2.5 percent in
December after increasing 6.6 percent in the preceding quarter.
Its shares slid 11 percent.
"The holiday selling season proved to be more challenging
than we expected as customers faced increasing financial
uncertainty," said Family Dollar Chairman and CEO Howard Levine.