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Solid Holiday Sales for Retailers, Despite a Few Misses

Most U.S. retailers turned in solid finish to the holiday season, despite bargain-hungry consumers who put off their holiday shopping until the last-minute in order to snag the very best deals, and mild temperatures, which dampened demand for winter apparel.

"It was a very promotional Christmas," said Adrianne Shapira, a retail analyst at Goldman Sachs. "We've been calling it was a 'White-knuckle Christmas.' It came late and it came on sale."

A customer purchases the Amazon.com Inc. Kindle Fire tablet computer at a Best Buy Co. store in New York, U.S., on Tuesday, Nov. 15, 2011. Amazon.com Inc.
Scott Eells | Bloomberg via Getty Images
A customer purchases the Amazon.com Inc. Kindle Fire tablet computer at a Best Buy Co. store in New York, U.S., on Tuesday, Nov. 15, 2011. Amazon.com Inc.

On average, same-store sales rose 3.4 percent, a touch higher than the 3.3 percent estimate from Thomson Reuters I/B/E/S. The gain also outpaced last December's 3.1 percent same-store sales gain.

The sales increase was led by stronger-than-expected performances at retailers such as Macy's,Limited and Zumiez, which all raised their earnings forecasts.

But there were some notable weak spots. Retailers such as Target,Kohl's ,J.C. Penney , and Children's Place Retail Stores cut their earnings outlooks.

"The holiday results reflect trends we can continue to expect into the New Year," said Frank Badillo, a senior economist at Kantar Retail. "We're seeing weak-to-modest growth overall that hides pockets of strength skewed toward upscale retailers and value-focused retailers that win over shoppers at the expense of their competitors."

Shapira said she suspects that Wal-Mart's push to focus on low prices may have hurt competitors such as Target.

Shapira also expects companies that have been performing well will continue to be stronger than companies that have been lagging.

Macy's , for example, has been reaping the benefits of the steps it took to revamp the merchandise in its stores to focus more on local markets, and to improve the way it sells to customers, whether they shop in stores or online.

In December, May's same-store sales rose 6.2 percent, ahead of the 5 percent estimate from Thomson Reuters. Sales were helped by a 35.8 percent surge in the company's online business.

On the back of the strong performance, Macy's said it would doubled its quarterly dividend to 20 cents a share, and its board approved a $1 billion stock buyback program.

But the results were different for others such as discounter Target , which fell short of analysts' expectations and cut its outlook for the fourth quarter.

Target said same-store sales rose 1.6 percent, far short of the 3.1 percent average analyst estimate from Thomson Reuters. As a result of its weak sales, Target cut its fourth-quarter earnings estimate to a range of $1.35 to $1.43 a share, from a prior estimate of $1.43 to $1.53 a share.

"December sales were below our expectations as growth in grocery and beauty offset softness in electronics and music, movies and books," said Gregg Steinhafel, chairman, president and chief executive officer of Target, in a press release. "Sales and traffic were strongest in the week leading up to Christmas as guests waited to shop for last-minute gifts."

Others who posted weak results blamed the mild winter temperatures, which hurt sales of winter apparel and other winter merchandise.

"December sales and margin were negatively impacted by unseasonably mild weather in all our markets throughout the month," said Tony Buccina, vice chairman, president, merchandising at Bon-Ton Stores, in a press release. "Cold-weather categories, which are highly profitable and represent approximately 25 percent of our business in December, were down mid-teens on a percentage basis.”

Bon-Ton's weak December sales prompted the retailer to widen its estimated loss for the year.

But the story was much different elsewhere. Teen retailers Zumiez and The Buckle smashed their final estimates and reported same-store sales gains of 10 percent and 8.9 percent, respectively.

Limited Brands , parent of Bath & Body Works and Victoria's Secret, also outpaced analysts' estimates, which called for a 5.7 percent same-store sales gain. The retailer's same-store sales rose 7.0 percent last month.

Both Limited and Zumiez raised their estimates for fourth-quarter earnings.

A run-down of the results so far follows:

Same-Store Sales, December 2011

Retailers
December 2011 Estimates
December 2011 Actuals
Costco Wholesale 7.6% 7.0%
Target 3.1% 1.6%
JC Penney (0.1%) 0.3%
Kohl's Department Store 2.2% (0.1%)
Dillards Department Store 3.0% 4.0%
JW Nordstrom 5.1% 8.7%
Saks Department Store 5.8% 5.8%
Stage Stores 1.0% 1.2%
Macy's 5.0% 6.2%
Gap (1.3%) (4%)
TJX 2.6% 8%
Limited 5.7% 7.0%
Ross Stores 4.2% 9%
Stein Mart (1.0%) Flat
Wet Seal (1.0%) (3.7%)
The Buckle 5.0% 8.9%
Zumiez 5.1% 10.0%
Walgreen (0.1%) 0.4%
Source: Thomson Reuters, company reports. Figures in parenthesis are losses.
Symbol
Price
 
Change
%Change
BKE
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BONT
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JCP
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KSS
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LB
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M
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PLCE
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TGT
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ZUMZ
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GPS
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JWN
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TJX
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COST
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