Retailers Post Modest Holiday Sales Growth

The nation’s retailers posted moderate sales gains in December as stores selling clothes to teens and young adults added a little sizzle to the holiday shopping season.

In what had been billed as one of the most difficult seasons in years to predict, retailers managed to pull out modest advances despite initial concerns that higher gasoline prices, rising home heating costs and money funneled to hurricane victims might squelch sales.

When the cash registers stopped ringing on New Year’s Eve, sales at stores open at least a year rose 3.2% last month, in line with predictions of a 3% to 3.5% increase, according to the International Council of Shopping Centers, which tallied the month’s sales based on the results at 66 chains nationwide.

“It certainly has come in pretty much as anticipated,� said Michael Niemira, the council’s chief economist.

Stores catering to the young and the affluent -- Wet Seal Inc., Guess Inc. and Nordstrom Inc. -- exceeded analysts’ expectations and saw their stocks rise in Thursday trading.

But a host of retail icons, including Wal-Mart Stores Inc., Sears Holding Corp. and Gap Inc., turned in disappointing results.

Although gasoline prices fell as the season progressed, they remained a “background issue for all retailers� last month because the price of regular-grade gasoline was almost 20% higher than a year earlier, the shopping center council said.

The holiday season, which consists of November and December, is particularly important to retailers, some of whom ring up 25% to 40% of their annual sales during that period. So-called same-stores sales -- considered a key measure -- rose 3.5% for the two months combined, the council said. It will remain unclear whether that will translate into higher profits until merchants start reporting financial results next month.

Several chains indicated Thursday that the news would not be good.

Wal-Mart said fourth-quarter earnings probably would be at the low end of its forecast of 82 cents to 86 cents a share. Analysts were expecting 84 cents. The Bentonville, Ark.-based retailing behemoth, which kicked off its first-ever celebrity advertising campaign Nov. 1 after being hurt by a slow start promoting itself last year, was outpaced in December by Target Corp., which logged a 4.7% gain, compared with Wal-Mart’s 2.2% increase. Wal-Mart shares fell 63 cents Thursday to $45.69.

San Francisco-based Gap, the nation’s largest specialty apparel retailer, said comparable-store sales fell 9%, more than double the 3.8% drop that analysts were expecting. The company’s Gap, Old Navy and Banana Republic chains all lost ground, marking the 14th consecutive month of flat or negative same-store sales for the company overall. Gap shares slipped 16 cents to $17.46.

Gap’s lump of coal prompted analyst Jennifer Black to question whether it was primed for a shake-up, something others have pondered previously. In a note to clients, Black said Gap could be in for “top leadership changes�

But Chairman Bob Fisher said Thursday that Gap had the right leader in Chief Executive Paul Pressler. Gap has made “huge progress� with Pressler at the helm, he said, including paying down close to $3 billion in debt.

“We have total confidence in Paul, and frankly I think he’s the right person for the company at this time,� Fisher said in an interview Thursday. “Anything beyond that is speculative and hearsay and has no basis in fact that I’m aware of.�

Regarding the sales slump, he said, “When a company gets to be our size, you have ups and downs.

“We could do a lot better than we are right now, and that’s what we’re trying to do,� Fisher added, expressing confidence that Gap would succeed.

Gap still expects annual profit to come in at $1.12 to $1.17 a share. Through December, results were tracking at the upper end of that range, the company said. Analysts polled by Thomson Financial have been expecting profit of $1.15 a share for the year.

Merchants targeting young shoppers delivered solid results in December, with teen chains logging a strong 11.1% gain in comparable-store sales.

Foothill Ranch-based Wet Seal posted a 38.5% jump after last year’s 11.8% decline, and its stock rose 8 cents to $4.49. It was Wet Seal’s 12th straight month of same-store sales growth.

Abercrombie & Fitch, another star of the season, posted a 29% increase, more than 10 percentage points higher than expected, while Guess Inc. of Los Angeles reported a 17.5% gain. Abercrombie shares climbed $1.02 to $66.02; Guess rose $1.82 to $38.81.

The luxury sector fared well in December, collectively posting a 6.4% gain after a weak 2% in November. Seattle-based Nordstrom, which had missed analysts’ expectations in three of the five previous months, sailed past forecasts in December with a 7.7% gain, twice what was expected, and its stock jumped $2 to $39.67.

Retailers now are focused on January, for most of them the final month of their fiscal years. It has become a more important month for retailers in recent years because of the growing popularity of gift cards, which aren’t counted as sales until they’re redeemed. Surveys indicate that 60% of gift cards are redeemed by the end of January, the shopping center council said.

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Times staff writer Abigail Goldman contributed to this report.

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Holiday sales

Year-over-year percentage change in December sales at stores open at least a year

*--* Company % change Wet Seal +38.5% Guess +17.5 Gymboree +16.0 Nordstrom +7.7 Ross +6.0 Target +4.7 Federated +3.4 J.C. Penney +2.2 Wal-Mart +2.2 Bebe +1.1 Pacific Sunwear +1.0 Limited Brands -1.0 Hot Topic -6.2 Gap -9.0 Sears -11.9 Sharper Image -15.0

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Sources: Times research, company reports