Holiday Sales Fell Short
Jan 7, 2004 12:00 PM
In spite of one extra pre-Christmas shopping day and a stronger consumer, December comparable-store sales fell slightly short of expectations. Lazard Freres analysts anticipate overall growth of 3.1 percent compared to an expected 4 percent. Blame inclement weather and increased gift card activity. Costco leads the retail pack with an expected 12 percent gain in sales for December, driven by increased spending strength among upper-end consumers and a higher volume of food sales caused by strikes at Costco's West Coast grocery competitors during part of the month.
One of the season's big losers is American Eagle Outfitters, according to Lazard's Todd Slater, who forecasts a 7 percent decline in comp sales for the chain. He blames the drop on an unappetizing merchandise assortment. Another is Kohl's. Though the company expects December comp sales to increase in the mid to single digits, Prudential Equity Group analyst Wayne Hood expects the discount department store's comp sales to drop 2 percent for December. Once the industry's darling, the chain appears to be having trouble digesting the armada of new stores it has opened in recent years. "Despite the company's recent marketing efforts and the sell-off in the stock, we believe the company's growth has outpaced its infrastructure and processes," he says.
Meanwhile, Kmart--the chain voted by analysts as most likely to fail--appears to be staging a turnaround. Kmart, which announced Monday it plans to post its first quarterly profit since emerging from bankruptcy last May. The troubled discounter's shares were up more than 26 percent after it revealed it expects net income for November and December to reach more than $200 million. Comp sales, however, are still on a downward slide, down 13.5 percent for the past quarter.
