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December Sales Figures Confirm It Was a Disappointing Christmas Graphic

January 3, 1991

Undated (AP) _ The nation’s largest retailers issued December sales figures Thursday that confirmed a disappointing Christmas season slowed by consumer worries over the economy and the Persian Gulf.

A number of companies reported business fell in comparison with the 1989 holiday season: Sears, Roebuck and Co.; J.C. Penney Co. Inc.; May Department Stores Co.; and Carter Hawley Hale Stores Inc.

Even Wal-Mart Stores Inc., a perennial superstar of the retailing industry, had a relatively sluggish month. But specialty apparel stores, particularly Gap Inc., fared better than other companies.

In some cases, modest gains were limited by the effects of inflation.

With economists forecasting recession well into this year, retailers were glum about prospects for a turnaround in business.

″Consumer confidence is as low as I have seen it in more than 20 years,″ said Kenneth Macke, chairman of Dayton Hudson Corp. ″We are not optimistic about the first half of 1991.″

Jeffrey Feiner, an analyst with Merrill Lynch & Co., said that as long as ″consumers continue to be barraged by declining home prices, increased energy prices and increases in unemployment,″ the retailing outlook for 1991 is likely to prove disappointing.

Retailers expected Christmas to be difficult after their sales fell off sharply in the aftermath of the Iraqi invasion of Kuwait in August. As oil prices shot up and Americans paid more for gasoline and home heating oil, they had less money to spend on clothing, furniture and appliances - the bread and butter of the big retailers’ business.

Storeowners reported during the season that consumers were shopping very cautiously, seeking the lowest prices and cutting back on the number of gifts they bought.

Many retailers slashed prices in the final days of the season in an effort to bring shoppers into the stores.

″As soon as retailers broke their prices and put in their discount prices, that’s when consumers responded,″ said Thomas J. Tashjian, an analyst with Seidler Amdec Securities Inc. in Los Angeles.

But the late rush was not enough to save the season for many retailers. Moreover, the steep markdowns were expected to take a heavy toll on retailer earnings at a time when stores hoped to make half their annual profits.

Besides consumer jitters about the economy and the Middle East, retailers also had to contend with the weather. Unusually high temperatures in some areas and heavy snows in others also hurt sales.

Many retailers, anticipating a difficult Christmas, had stocked shelves carefully but sales still fell short of their conservative estimates, Feiner said.

Sears, the nation’s largest retailer, said December sales at stores open at least a year fell 0.3 percent, while the company’s overall sales rose 1.4 percent. Sears characterized its holiday sales as below expectations.

Securities analysts and investors believe sales from stores open at least a year - also known as same-store or comparable store sales - provide a more accurate assessment of a retailer’s performance than overall sales. New stores tend to have extraordinarily strong sales that can skew a retailer’s results.

Penney said same-store sales fell 0.3 percent, while its overall take rose 1.5 percent.

May reported same-store sales dropped 0.7 percent, with overall sales rising 9.5 percent, while at Carter Hawley Hale, same-store sales slipped 3.7 percent and overall sales fell 1.7 percent.

Department store operators like May and Carter Hawley Hale, which traditionally have more expensive merchandise, lost business to discounters as consumers ″traded down″ or bought less expensive gifts.

Other companies reported sales were up slightly, but those gains were countered by inflation. Consumer prices rose at an annual rate of 6.4 percent through November.

Kmart Corp. had a 1.2 percent gain in December same-store sales while overall sales rose 4.6 percent.

Dayton Hudson reported a 2.4 percent same-store sales gain, and a 15 percent advance overall. The company’s Target discount store division was its strongest performer, while department stores were the weakest.

Wal-Mart said same-store sales were up 6 percent, well below the company’s double-digit increase of past years, while overall sales were up 23 percent.

Gap said same-store sales were up 12 percent, while overall sales rose 24 percent. The nation’s biggest specialty apparel retailer, Limited Inc., reported a 4 percent same-store sales gain and a 19 percent overall increase.

Consumers’ caution even extended to their children. On Wednesday, Toys R Us Inc., the nation’s largest toy store chain, said same-store sales fell during its eight-week Christmas season from 1989 levels.

The results reported Thursday differ from the monthly retail sales report from the Commerce Department, which includes sales from supermarkets, restaurants and car dealers.

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