Retailers' Sales Results Ease Some Concerns About Holiday Season
January 07 2016 - 3:03PM
Dow Jones News
By Chelsey Dulaney
A number of retailers on Thursday reported better-than-expected
sales growth for the holiday season, easing some investor concerns
about the year's most important selling period following the
warning Wednesday from Macy's Inc.
The full picture of the holiday season remains uncertain,
however, as many large retailers--such as Wal-Mart Stores Inc.
Target Corp. and Amazon.com Inc.--haven't broken out their holiday
sales.
What is emerging so far, however, is sales appeared to have held
up better at retailers selling products immune to the unseasonably
warm weather that hit much of the country last month, as well as
those stores with a growing online presence. Standouts included L
Brands Inc., Children's Place Inc. and Zumiez Inc.
Still, the retail industry's larger issues remain. Customer
traffic fell at many stores and malls, as more sales moved online.
Also, shoppers continued to search for discounts, forcing retailers
to offer promotions and potentially face lower profits.
Overall, retail chains saw a 6.4% slide in traffic at physical
stores during November and December, according to RetailNext, which
collects data through analytics software it provides to retailers.
Sales at stores slipped 2% for the period but was helped by strong
performances in the last two weeks of the year.
Adding to the pressures this holiday season was unseasonably
warm weather in many parts of the country. Macy's said 80% of its
year-over-year sales decline was due to the warmer winter weather,
which dampened sales of cold-weather gear like coats, sweaters and
boots. In all, Macy's said sales at existing stores fell 4.7% in
November and December.
Department store rival J.C. Penney said that while warmer
weather significantly affected its apparel sales, the company's
total core sales still rose 3.9% for the holiday period. Penney
cited, in part, its efforts to improve online sales by offering
things like in-store pickup, and the retailer said it saw record
online sales this holiday season.
Meanwhile, sales at Children's Place rose a better-than-expected
7.3% in the first nine weeks of its fourth quarter, helped in part
by the company's decision to cut back on its cold weather
merchandise this year after a similarly warm start to winter last
year, according to a research note from Stifel Nicolaus.
The holiday results prompted Children's Place to bolster its
earnings guidance for the quarter, as did fellow retailers Cato
Corp., Francesca's Holdings Corp. and Zumiez.
Zumiez, which sells action-sports equipment such as snowboarding
and skateboarding gear, had lowered expectations Dec. 3, blaming
fashion misses and the effect of sales promotions. Wednesday, the
company said results weren't as bad as previously projected.
Analysts, in part, credited improvements in Zumiez's digital
strategy.
In all, industry tracker Retail Metrics said its index of
retailers like L Brands and Buckle Inc. is showing a 0.9% increase
in December sales, above expectations for a 0.5% increase.
That number notably doesn't include the results of Gap Inc.,
which is expected to report sales after the bell Thursday. Retail
Metrics is forecasting a 3.9% slide in comparable sales for Gap,
led by a 13.3% decline at Banana Republic.
Some retailers that don't rely on sales of winter apparel
reported strong results. L Brands Inc., which owns Victoria's
Secret and Bath & Body Works, said it saw its "best December
ever" with an 8% increase in same-store sales. For Victoria's
Secret, core online sales jumped 14%.
Signet Jewelers Ltd., the parent of brands like Kay and Zales,
said its core sales rose 4.9% in the holiday season, as online
sales rose 11%.
Costco Wholesale Corp., the world's second-largest retailer,
reported a 1% sales increase in December, edging in narrowly above
expectations despite a hit from lower gas prices and foreign
exchange.
The positive tone to holiday sales Thursday boosted the stock
prices of many retailers in midday trading, despite a larger market
selloff. Among the bigger gainers, Zumiez rose 9.2%, Penney gained
2.9%, L Brands added 1.4%, and even Macy's traded higher, up
1.9%.
Overall, retailers made up more than half of the top 20 gainers
Thursday in the S&P 500.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
January 07, 2016 14:48 ET (19:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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