Retailers enjoy best season in 4 years

Nervous retailers had their best holiday season in four years as shoppers opened their wallets for last-minute gifts and post-holiday discounts.

Merchants from discounter Wal-Mart to luxury chain Neiman Marcus ended up with solid sales increases in December.

Sales at stores open at least a year rose 4.2 percent in December, according to the International Council of Shopping Centers (ICSC) Chain Store Sales Index.

“The last-minute surge in spending gave retailers their strongest holiday season since 1999,” said Michael Niemira, ICSC’s chief economist and director of research. “Though the results were mixed by category, the overall outcome to the season was consistent with our expectations.”

For the November to December period, comparable-store sales rose 4 percent, according to the ICSC’s tally of nearly 80 chain stores.

After a promising start during the Thanksgiving weekend, sales trickled off, causing anxious retailers to rely more heavily on the final week before Christmas and post-holiday sales to boost the bottom line. This year, the lackluster early season was plagued by snowstorms in the Northeast and consumers holding out for bigger sales and deeper discounts.

But the surge in business at the end of December boosted sales for many merchants.

An increase in traffic the last two weeks in December helped Wal-Mart, the world’s largest retailer, gain 4.3 percent in sales over the comparable month last year. Target Corp.’s December same-store sales rose 4.1 percent, at the low end of its forecast.

Nordstrom Inc. and Limited Brands Inc. posted significant same-store sales increases last month — 9.1 percent and 6 percent, respectively.

Same-store sales are considered the most accurate indicator of a retailer’s health.

Mr. Niemira said December sales were driven by bargain hunters, particularly the day after Christmas, and the redemption of gift cards.

“The holiday season may be over but holiday spending [continues] because of gift cards,” he said. “There’s still a pool of unspent holiday dollars that will turn up in January and in upcoming months.”

Consumers were expected to spend about $17 billion on gift cards this season, which would account for nearly 8 percent of all holiday sales, the National Retail Federation said.

Luxury retailers were the biggest winners.

Sales at Neiman Marcus Group Inc. rose 15 percent. Sales at Saks Inc. rose 5.1 percent, partly because of the 9.6 percent gain at its Saks Fifth Avenue stores. Tiffany & Co. said December same-store sales climbed 16 percent in the United States.

Others weren’t so lucky:

• Gap Inc. said same-store sales rose just 1 percent, less than the 5.1 percent gain projected by analysts.

• Sears, Roebuck and Co. posted a 0.8 percent decline for the month.

• December sales at discounter Kohl’s fell 1.2 percent.

• Same-store sales at Toys R Us Inc. fell 4.9 percent during the holiday season, as shoppers turned to discounters such as Wal-Mart to get better prices.

But Mr. Niemira said the overall positive holiday season is an omen for better things to come.

“Typically a good holiday season is followed by a good economic year,” he said. “The momentum looks more favorable for 2004.”