Despite reporting some of the strongest sales gains in four years, retailers largely fell short of Wall Street's estimates as still-cautious consumers spent their money carefully, and a Northeast blizzard stole from post-Christmas sales.
Overall, retail sales rose 3.1 percent in December, just shy of the 3.4 percent analyst estimate reported by Thomson Reuters. Although sales were weaker-than-expected, they did top the 2.9 percent growth rung up last December.
Still, there were some notable sales shortfalls with large retailers such as Target , Macy's, and Gap all falling short of analysts' estimates.
"We did a lot better before the snow hit, no question about it," Macy's Chief Executive Terry Lundgren told CNBC in an interview.
Lundgren said that the retailer met its own expectations and backed its earnings forecast, which calls for earnings to be between $1.44 and $1.49 a share. Still, shares were lower in the wake of the department store's first same-store sales miss in more than a year.
Snow also may have factored into why online sales were so strong this holiday season. Instead of heading to the mall, consumers may have just sat home in front of their computer and made purchases.
Data tracker ComScore said U.S. online sales for the November to December holiday shopping period were a record $32.6 billion, up 12 percent from the prior year.
But there were some strong results particularly among high-end retailers. Both Saks and Nordstrom outpaced estimates as more affluent consumers picked up their spending.
Nordstom shares rose after the retailer said sales in stores open more than 12 months rose 8.4 percent, compared with an analyst estimate of 3.2 percent. Meanwhile, Saks said same-store sales rose 11.8 percent, compared with a 3.9 percent.
Compared with November, December was "a different ballgame for retail," said Wall Street Strategies analyst Brian Sozzi.
"In many respects, December was more in tune with the trend throughout 2010; selective buying once a budget was met or selective buying if the promotion was not there or eye-catching," Sozzi said. "Traffic to the mall was soft in the first part of the month and retailers blinked, offering promotions that were a bit off plan in the days preceding and post the Christmas holiday."
In addition to Saks and Nordstrom, some of the strongest same-store sales results came from teen retailers Abercrombie & Fitch and Zumiez, which reported same-store sales gains of 15.0 percent and 9.2 percent, respectively.
However, those gains did not guarantee the retailers would outpace Wall Street's estimates. While Abercrombie trumped the 10.7 percent estimate from Thomson, Zumiez fell short of the 11.5 percent sales target from analysts.
As has been the case for several quarters, the news was not all good in the teen sector. American Eagle Outfitters reported an 11 percent decline in same-store sales, far wider than the 1.9 percent loss that was projected by analysts.
Aeropostale and Wet Seal also turned in sales declines compared with last year. Wet Seal also lowered its earnings forecast.
Both warehouse clubstores Costco and BJ's Wholesale fell short of analysts' estimates. Costco said its same-store sales rose 6.0 percent, just shy of the 6.2 percent gain analysts were estimating, Thomson said.
At BJ's Wholesale the sales shortfall was wider. The retailer said same-store sales rose 3.8 percent, compared with the 4.4 percent gain analysts were predicting.
But discounter Target trumped them both, posting one of the biggest misses among all retailers.
Target had attempted to lure in shoppers by offering customers money back on purchases made during the holiday season using one of their store credit cards.
In a press release, Target Chairman and CEO Gregg Steinhafel said key holiday gift merchandise saw strength earlier in the season, but in December "strength in grocery and apparel was offset by softness in the electronics, toys and some home categories."
“Overall, it was a good holiday season versus historical levels,” said Tom Clarke, a director in the global retail practice at AlixPartners. However, Clark expects retailers to continue to see a “challenging marketplace.”
Clarke expects consumers to shop with an eye on value.
Gasoline prices are on the rise and that will eat into discretionary income, he explained. Also, he added, retailers are facing rising costs for cotton and other commodities, which will force them to increase the prices they charge.
These will be significant headwinds for retailers, especially for those that may have missed analysts’ estimates in December.
A table of the results follows: