Retailers report dismal December sales
Locally, some stores may have performed better than expected
Retailers across the country reported dismal sales figures for December on Thursday, but retailers in Western New York are hoping to buck that trend.
Though Western New York retailers have not released official numbers, local malls expect to fare slightly better than the national average.
“We’re cautiously optimistic sales weren’t as gloomy as they were nationally,” said Betsey Bonvissuto, spokeswoman for Boulevard Mall. “However, it has been a very challenging season.”
As national merchants reported their sales figures, confirming fears that the holiday season was the weakest in four decades, the malaise cut through practically all areas from kitchen gadget stores to jewelry purveyors and teen apparel retailers.
Locally, expenditures per customer seemed to drop, mall managers said, but traffic stayed steady.
“Quite frankly, except for those two snow days, traffic was strong in the mall compared to years past,” said John Ecklund, assistant general manager at the Walden Galleria.
December started out slowly for most local malls, but traffic picked up dramatically toward the end. Bad weather kept shoppers away during the crucial weekend before Christmas, but shoppers mobbed the malls afterwards to make up for lost time.
“Some retailers told me the Monday and Tuesday before Christmas were their best days ever,” said Jeff Ohle, general manager of the McKinley Mall. “Comments like that lead me to believe we’ll be just fine.”
The deep discounts that began well before the official start of the holiday season spurred a number of merchants to cut their earnings outlooks on Thursday, fueling more concerns about the health of the industry.
Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc., Gap Inc. and Abercrombie & Fitch Co.
But the biggest surprise came from Wal-Mart Stores, the world’s largest retailer, which posted a smaller sales gain than what Wall Street expected and cut its fourth-quarter earnings outlook.
“This suggests that the lower income group is feeling the pinch more than we thought and this is clearly reflected in the lower-than-expected numbers at Wal-Mart,” said Ken Perkins, president of research company RetailMetrics LLC. “I think it says the economy is in more dire straits than we thought.”
Wal-Mart, blaming the weak economy and severe winter conditions, said that same-store sales, or sales at stores opened at least a year, rose 1.2 percent. Excluding the impact of declining gasoline prices at the pump, the gain was 1.7 percent. Analysts surveyed by Thomson Reuters had expected a 2.8 percent increase, excluding fuel.
Wal-Mart Manager Sean Robb expected sales at the Supercenter in Clarence to come in above those of its national counterparts, saying the store is uniquely suited for the local population.
“The Buffalo shopper is always looking for a bargain and we provide it,” Robb said. “They support us in good times and bad.”
Wal-Mart noted that health and wellness items nationally were the categories that primarily fueled sales. Electronics sales were solid, while the apparel and jewelry business was weak.
Given the disappointing sales and higher-than-anticipated expenses, Wal-Mart said it now expects to earn 91 cents to 94 cents per share in the fourth quarter from continuing operations. That’s down from its previous projected range of $1.03 per share to $1.07 per share. Analysts surveyed by Thomson Reuters expected $1.06 per share.
Among department stores, Sears Holdings said its December same-store sales dropped 7.3 percent, weighed down by a 12.8 percent drop at domestic Sears stores. The company, whose brands include Kenmore and Craftsman, said Kmart same-store sales fell 1.1 percent.
Macy’s Inc. reported that same-store sales fell 4 percent in December, less than the 5.3 percent decline that analysts had expected. For the combined November-December period, same-store sales were down 7.5 percent. But the department store chain cut its fourth-quarter and full-year earnings outlook due to heavy markdowns and announced plans to close 11 underperforming stores. No stores in Western New York are among the 11 being closed. The chain operates more than 840 Macy’s stores.
Limited Brands Inc. posted a 10 percent drop in same-store sales, larger than the 7.8 percent decline analysts predicted. The company also lowered its fourth-quarter earnings outlook.
Gap Inc. suffered a 14 percent drop in same-store sales, worse than the 9.3 percent decline that analysts had expected. It also cut its earnings outlook.
“Customers waited until late in the month to shop and we faced a highly competitive promotional environment,” said Gap’s Chief Financial Officer Sabrina Simmons.
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