Even Wal-Mart's December sales results are disappointing
Pedestrians walk past Generations
Menswear on 8th Ave. in New York. Retailers are reporting dismal sales for December, confirming fears that the holiday season was the weakest in four decades.
NEW YORK - December retail sales were so dismal that even mighty Wal-Mart fell short, making it all but certain it was the worst holiday season in four decades.
The malaise cut through practically all areas, from kitchen gadget stores to apparel retailers, as shoppers, grappling with tightening credit and rising layoffs, focused on smaller purchases and the deepest discounts.
Even drugstores were feeling the pain. Walgreen Co. said it will cut 1,000 jobs this year, or about 9 percent of corporate management, through a combination of voluntary buyouts and layoffs.
The International Council of Shopping Centers-Goldman Sachs overall tally of same-store sales dropped 1.7 percent for December. That was worse than the already reduced estimate for a 1 percent decline in sales at chain stores.
It also means that same-store sales for the November-December period dropped 2.2 percent, making it the weakest holiday period since at least 1969, when the index began.
For the calendar year, retail sales rose on average a modest 1 percent, the weakest year since at least 1970, according to Michael P. Niemira, chief economist at the ICSC. The tally is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer's health.
Among the many that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, and Limited Brands Inc. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted sales below Wall Street estimates and cut its fourth-quarter earnings outlook.
"This suggests that the lower income group is feeling the pinch more than we thought and this is clearly reflected in the lower-than-expected numbers at Wal-Mart," said Ken Perkins, president of research company RetailMetrics LLC. "I think it says the economy is in more dire straits than we thought."
Macy's sales at stores opened for more than a year dropped 4 percent. Combining November and December, sales fell 7.5 percent, the retailer said. Macy's also announced it was closing 11 stores it said were underperforming at a cost of $65 million to be charged to fourth-quarter results.
Wal-Mart, blaming the weak economy and severe winter conditions, said that same-store sales rose 1.2 percent. Excluding the impact of declining gasoline prices at the pump, the gain was 1.7 percent. Analysts surveyed by Thomson Reuters had expected a 2.8 percent increase, excluding fuel.
"The current economy remains challenging for all businesses, and retailers have already seen customers pull back on discretionary spending," Wal-Mart's Chief Financial Officer Tom Schoewe said in a statement. "Consumers are very focused on value and necessities."
Given the disappointing sales and higher-than-anticipated expenses, Wal-Mart said it now expects to earn 91 cents to 94 cents per share in the fourth quarter from continuing operations. That's down from its previous projected range of $1.03 per share to $1.07 per share. Analysts surveyed by Thomson Reuters expected $1.06 per share.
Discount rival Target Corp. said its same-store sales fell 4.1 percent in December, but the result was better than Wall Street analysts predicted.
The retailer said the results reflected stronger sales in the last two weeks of the month. Analysts surveyed by Thomson Reuters predicted a same-store sales drop of 9.1 percent.
Target President and Chief Executive Gregg Steinhafel said the company reduced prices during the month to gain market share. The markdowns combined with additions to the company's accounts receivable allowance will reduce profitability in the fourth quarter.
Meanwhile, Costco Wholesale Corp. reported a 4 percent decline in same-store sales, but excluding the impact of lower gas prices and currency fluctuations, it actually posted a 4 percent gain. Analysts surveyed by Thomson Reuters predicted a 3.7 percent decline.
Sears Holdings said its December same-store sales dropped 7.3 percent, weighed down by a 12.8 percent drop at domestic Sears stores. The company, whose brands include Kenmore and Craftsman, said Kmart same-store sales fell 1.1 percent.
Limited Brands Inc. posted a 10 percent drop in same-store sales, larger than the 7.8 percent decline analysts predicted. Based on disappointing sales, Limited also lowered its fourth-quarter earnings outlook.
Deerfield, Ill.-based Walgreen said the job cuts will come from corporate and field management and won't include store employees. The targeted workers will be able to resign or retire with severance pay and benefits based on their tenure. The job reductions are part of Walgreen's cost-cutting plan, which is intended to save the company $1 billion per year starting in fiscal 2011.
J.C. Penney Co.'s same-store sales within its department store division fell 8.1 percent, better than the 10.3 percent decline analysts had expected.
But luxury stores fared far worse as affluent shoppers sharply cut back on buying Gucci handbags and other status goods, spooked by the financial meltdown that led to massive layoffs on Wall Street and shrinking investment portfolios. Saks Inc. posted a 19.8 percent drop for the month, worse than the 10 percent decline Wall Street expected. Neiman Marcus Group Inc. suffered a 27.5 percent decline in same-store sales.
Gap Inc. suffered a 14 percent drop in same-store sales, worse than the 9.3 percent decline that analysts had expected. It also cut its earnings outlook.
"Customers waited until late in the month to shop and we faced a highly competitive promotional environment," said Gap's Chief Financial Officer Sabrina Simmons.
Teen apparel retailers also suffered through a miserable holiday season. Wet Seal Inc. reported a 12.5 percent decline, larger than the 11.9 percent analysts expected, as its Arden B chain dragged down results. Abercrombie & Fitch Co. reported a 24 percent drop, in line with the 23.5 percent drop analysts had forecast.
Kitchen gadget chain Williams-Sonoma Inc., which didn't break out December figures, said its same-store sales dropped more than 24 percent for the eight-week period ended Dec. 28 and warned its fourth-quarter profit will likely come in at the low end of expectations.
Video game retailer GameStop Corp. bucked the trend, turning in a same-store sales increase of 10.2 percent in the nine weeks between Nov. 2 and Jan. 3.
Three of the top five best-selling games were from Activision Blizzard Inc.: "Call of Duty: World at War," "Guitar Hero World Tour" and "World of Warcraft: Wrath of the Lich King." Microsoft Corp.'s alien shooter "Gears of War 2" and Nintendo's "Wii Fit" were also among the top sellers.
Hardware sales were led by Nintendo's Wii and Microsoft's Xbox 360.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Pedestrians walk past GenerationsMenswear on 8th Ave. in New York. Retailers are reporting dismal sales for December, confirming fears that the holiday season was the weakest in four decades.
NEW YORK - December retail sales were so dismal that even mighty Wal-Mart fell short, making it all but certain it was the worst holiday season in four decades.
The malaise cut through practically all areas, from kitchen gadget stores to apparel retailers, as shoppers, grappling with tightening credit and rising layoffs, focused on smaller purchases and the deepest discounts.
Even drugstores were feeling the pain. Walgreen Co. said it will cut 1,000 jobs this year, or about 9 percent of corporate management, through a combination of voluntary buyouts and layoffs.
The International Council of Shopping Centers-Goldman Sachs overall tally of same-store sales dropped 1.7 percent for December. That was worse than the already reduced estimate for a 1 percent decline in sales at chain stores.
It also means that same-store sales for the November-December period dropped 2.2 percent, making it the weakest holiday period since at least 1969, when the index began.
For the calendar year, retail sales rose on average a modest 1 percent, the weakest year since at least 1970, according to Michael P. Niemira, chief economist at the ICSC. The tally is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer's health.
Among the many that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, and Limited Brands Inc. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted sales below Wall Street estimates and cut its fourth-quarter earnings outlook.
"This suggests that the lower income group is feeling the pinch more than we thought and this is clearly reflected in the lower-than-expected numbers at Wal-Mart," said Ken Perkins, president of research company RetailMetrics LLC. "I think it says the economy is in more dire straits than we thought."
Macy's sales at stores opened for more than a year dropped 4 percent. Combining November and December, sales fell 7.5 percent, the retailer said. Macy's also announced it was closing 11 stores it said were underperforming at a cost of $65 million to be charged to fourth-quarter results.
Wal-Mart, blaming the weak economy and severe winter conditions, said that same-store sales rose 1.2 percent. Excluding the impact of declining gasoline prices at the pump, the gain was 1.7 percent. Analysts surveyed by Thomson Reuters had expected a 2.8 percent increase, excluding fuel.
"The current economy remains challenging for all businesses, and retailers have already seen customers pull back on discretionary spending," Wal-Mart's Chief Financial Officer Tom Schoewe said in a statement. "Consumers are very focused on value and necessities."
Given the disappointing sales and higher-than-anticipated expenses, Wal-Mart said it now expects to earn 91 cents to 94 cents per share in the fourth quarter from continuing operations. That's down from its previous projected range of $1.03 per share to $1.07 per share. Analysts surveyed by Thomson Reuters expected $1.06 per share.
Discount rival Target Corp. said its same-store sales fell 4.1 percent in December, but the result was better than Wall Street analysts predicted.
The retailer said the results reflected stronger sales in the last two weeks of the month. Analysts surveyed by Thomson Reuters predicted a same-store sales drop of 9.1 percent.
Target President and Chief Executive Gregg Steinhafel said the company reduced prices during the month to gain market share. The markdowns combined with additions to the company's accounts receivable allowance will reduce profitability in the fourth quarter.
Meanwhile, Costco Wholesale Corp. reported a 4 percent decline in same-store sales, but excluding the impact of lower gas prices and currency fluctuations, it actually posted a 4 percent gain. Analysts surveyed by Thomson Reuters predicted a 3.7 percent decline.
Sears Holdings said its December same-store sales dropped 7.3 percent, weighed down by a 12.8 percent drop at domestic Sears stores. The company, whose brands include Kenmore and Craftsman, said Kmart same-store sales fell 1.1 percent.
Limited Brands Inc. posted a 10 percent drop in same-store sales, larger than the 7.8 percent decline analysts predicted. Based on disappointing sales, Limited also lowered its fourth-quarter earnings outlook.
Deerfield, Ill.-based Walgreen said the job cuts will come from corporate and field management and won't include store employees. The targeted workers will be able to resign or retire with severance pay and benefits based on their tenure. The job reductions are part of Walgreen's cost-cutting plan, which is intended to save the company $1 billion per year starting in fiscal 2011.
J.C. Penney Co.'s same-store sales within its department store division fell 8.1 percent, better than the 10.3 percent decline analysts had expected.
But luxury stores fared far worse as affluent shoppers sharply cut back on buying Gucci handbags and other status goods, spooked by the financial meltdown that led to massive layoffs on Wall Street and shrinking investment portfolios. Saks Inc. posted a 19.8 percent drop for the month, worse than the 10 percent decline Wall Street expected. Neiman Marcus Group Inc. suffered a 27.5 percent decline in same-store sales.
Gap Inc. suffered a 14 percent drop in same-store sales, worse than the 9.3 percent decline that analysts had expected. It also cut its earnings outlook.
"Customers waited until late in the month to shop and we faced a highly competitive promotional environment," said Gap's Chief Financial Officer Sabrina Simmons.
Teen apparel retailers also suffered through a miserable holiday season. Wet Seal Inc. reported a 12.5 percent decline, larger than the 11.9 percent analysts expected, as its Arden B chain dragged down results. Abercrombie & Fitch Co. reported a 24 percent drop, in line with the 23.5 percent drop analysts had forecast.
Kitchen gadget chain Williams-Sonoma Inc., which didn't break out December figures, said its same-store sales dropped more than 24 percent for the eight-week period ended Dec. 28 and warned its fourth-quarter profit will likely come in at the low end of expectations.
Video game retailer GameStop Corp. bucked the trend, turning in a same-store sales increase of 10.2 percent in the nine weeks between Nov. 2 and Jan. 3.
Three of the top five best-selling games were from Activision Blizzard Inc.: "Call of Duty: World at War," "Guitar Hero World Tour" and "World of Warcraft: Wrath of the Lich King." Microsoft Corp.'s alien shooter "Gears of War 2" and Nintendo's "Wii Fit" were also among the top sellers.
Hardware sales were led by Nintendo's Wii and Microsoft's Xbox 360.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
