Shoppers in November turned out in droves for big bargains on Black Friday, helping retailers to post improved sales growth, but by the end of the month, some retailers, especially those at the mall, saw a slowdown in consumer traffic.
This paints an uncertain picture for the all-important holiday shopping season as many of those who fell short of analyst estimates largely blamed economic concerns. Consumers appear cautious amid a weak housing market and higher gasoline prices.
Still, a good number of retailers remain largely upbeat about the holidays heading into the final weeks of the season.
One positive sign is that retail inventories remain "clean," except at department stores such as J.C. Penney's and Kohl's, said Dana Telsey, chief research officer at Telsey Advisory Group, in an interview on CNBC's "Squawk Box."
"Those that are a little bit weaker, it's all about traffic," Telsey said. "Traffic was key for having a successful November, along with a successful Black Friday weekend."
Traffic was generally higher than a year ago on Black Friday, the day after Thanksgiving when many shoppers come out for doorbuster deals offered by retailers. However, Telsey said, Black Friday typically makes up only about 20% of the sales in November.
"Any additional weakness is coming from retailers not getting those extra footsteps through the door," Telsey said.
Still, comments from Targetwere weighing heavy on stocks in the sector. The discount retailer, which has seen a slowing in its sales in recent months, warned it might not be able to meet its fourth-quarter earnings forecasts if sales don't significantly improve. Target saw sales trail off after a solid turnout on Black Friday.
Some recent holiday surveys have shown that consumers are waiting for bigger discounts that retailers often use to pull procrastinating shoppers in during the final days leading up to the holiday.
"November’s numbers provide a good snapshot of the state of the shopper this holiday," said Frank Badillo, a senior economist for TNS Retail Forward. "Upper income shoppers are driving good results among some retailers while lower- and increasingly middle-income shoppers drag down results at other retailers."
Wal-Mart Stores, the world's largest retailer, and warehouse club operators Costco Wholesale and BJ's Wholesale were among those retailers that managed to report stronger-than-expected sales. Both were helped by a strong consumer response to promotions that they offered.
Wal-Mart began discounting products aggressively early in the holiday season in order to strengthen its image as a place where consumers can find good values. Wal-Mart's sales in stores open at least a year rose 1.5%, with its flagship stores posting a 1% gain and Sam's Club having a 4.3% advance excluding fuel sales.
The company hadprojected U.S. same-store sales to be flat to up 2%.
Wal-Mart said sales on Black Friday were "very solid" across the store. However, sales for the entire month were led by its groceries and pharmacy business, and sales of home-related goods remained soft.
For December, the retailer estimated same-store-sales growth of 1% to 3%.
Costco said sales at stores open at least a year rose 9 percent for the four weeks ended Dec. 2, well ahead of the 6.6 percent increase analysts surveyed by Thomson had predicted.
BJ's Wholesale had a 7.7 percent gain in same-store sales, better than the 4.2 percent estimate.
Overall, November same-store sales growth improved to 3.5% from the prior month and from the prior year for about 50 retailers reporting monthly results today, TNS Retail Forward said.
November’s result is up from a 1.7% sales-weighted composite reported last month and up from the 2.8% composite reported in November of 2006.
Weak Spots at The Mall
Still, there were good number of retailers who fell short of Wall Street's expectations. According to Thomson Financial, 51% of the retailers they track have missed average analyst estimates, while 44% have outpaced analysts' forecasts.
Among the biggest misses are apparel retailers Chico’s FAS and Zumiez, and furniture store Haverty Furniture.
Others topping expectations included high-end retailers JW NordstromandSaks, teen retailer The Buckle, and men's clothing store Joseph A. Banks Clothiers.
Nordstrom, which had struggled earlier in the fall when temperatures were unseasonably warm, said same-store sales rose 8.7 percent, topping analysts estimates, which had called for a 3.7 percent gain.
The company, like many other department store retailers, said November same-store sales benefited from a timing shift of having 53rd week in fiscal 2006 resulting in a week of holiday shopping being shifted from December into November in fiscal 2006. Nordstrom expects December same-store sales to be negatively impacted by the calendar shift.
Saks also benefited from the calendar shift and sales of women's shoes, men's accessories and fine jewelry. Same-store sales rose 25.7 percent, compared with estimates that called for an increase of 11.8 percent.
Even many mid-tier department stores such as Macy'sand Bon-Ton fared better in November than they had earlier this fall.
Macy's same-store sales rose 13.4 percent, compared with a 8.2 percent gain estimated by analysts, according to Thomson.
The retailer said it benefited from the colder weather, holiday promotions and a shift in its calendar. The timing of the calendar will result in Macy's sales in December being down between 4 percent and 7 percent.
Macy's said it still expects fourth-quarter same-store sales in a range of down 2 percent to up 1 percent.
But the calendar shift did not help J.C. Penney's, which missed expectations. The department store said same-store sales rose 2.6%, below the 3.7 percent estimate.
Many mall-based apparel chains also suffered. These include Gap, Limited, and Chico's FAS, among others.
Limited,the parent of Victoria's Secret, said same-store sales fell 7 percent. That was worse than the 5 percent decline analysts were expecting.
The retailer cut its forecast two weeks ago from flat sales to down by the mid-single digits on a percentage basis, citing the "challenging" retail environment.
However, AnnTaylor Storesfared better. The retailer said same-store sales rose 3.9 percent in November, topping estimates for a gain of 2.5 percent. However, AnnTaylor also saw traffic slow to a trickle late in the month.
Heading into the holiday-selling season, there had been an expectation that sales would be soft. The National Retail Federation was estimating holiday sales would be up a modest 4% to $474.5 billion. That falls short of the 10-year average of 4.8%. If the forecast proves true, it will be the weakest holiday since 2002, when sales rose a meager 1.3%.
Christina Cheddar Berk is a News Editor at CNBC.com. She can be reached at firstname.lastname@example.org.