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Tallying the Christmas Rush: Sales Gain, Profit Pain?

Wednesday, 4 Jan 2012 | 12:53 PM ET

So after months of speculating how retailers would fare during the holiday season, investors will get some hard-and-fast answers Thursday, when more than 20 retail chains report their monthly sales for December.

Holiday shoppers outside
Getty Images
Holiday shoppers outside

Retailers are expected to report healthy sales gains in December, as a last-minute flurry of shoppers scooped up marked-down merchandise.

On average, analysts are estimating a 3.4 percent gain in sales at stores open at least 12 months, year-over-year, according to the Thomson Reuters Same-Store Sales Index.

If this proves true, the gain would actually top the group's increase last December of 3.1 percent.

According to Thomson Reuters, discounters in the group should post the strongest sales gains on a percentage basis, offering yet another sign of consumers' thrifty attitudes.

Despite the optimistic attitudes regarding sales, there remains some concern about the price retailers paid to woo consumers. Many retailers slashed prices during the holiday season and extended their hours to lure in consumers.

The strategy appears to have worked. Earlier Wednesday, the International Council of Shopping Centers and Goldman Sachs showed the month ended on a high note, with sales for the week ended Dec. 31 up 5.3 percent, which was the fastest weekly gain since July 11, 2010.

However, Thursday's upcoming batch of monthly sales reports may offer insight into whether the discountsretailers offered plus the extended store hours squeezed their profits.

The late Christmas rush may make all the difference to retailers, according to some analysts.

In a research note, Stifel Nicolaus analyst Richard Jaffe said the high-volume sales periods (and the lulls) continue to grow "more pronounced" in retail. Still, Jaffe was encouraged that while promotions continued, the level for most retailers he follows did not accelerate.

Ahead of Thursday's reports many retail stocks were trading lower. Among them were discounter Target , luxury retailer Saks , and department store JCPenney. Shares of Wal-Mart Stores , the nation's largest retailer, also fell Wednesday, although the retailer doesn't report its same-store sales on a monthly basis.

But other retail stocks were posting gains, including Gap, which has been struggling to turn around its business; TJX Cos., the parent of off-price retailers TJ Maxx and Marshall's; and Limited Brands , the parent of Victoria's Secret.

According to Thomson Reuters, analysts on average are predicting the following:

Top 10 Traded Options Contracts for 2011

Underlying Security Dec. YTD, 2011 Volume %
SPY 729,478,419 15.99%
SPX 197,509,449 4.33%
IWM 167,040,702 3.66%
QQQ 137,923,379 3.02%
BAC 114,362,369 2.51%
AAPL 108,586,176 2.38%
C 102,526,010 2.25%
VIX 97,988,951 2.15%
XLF 81,871,564 1.79%
SLV 79,433,438 1.74%
Source: OCC
  Price   Change %Change
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