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December retail sales mixed
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January 10, 2002: 11:45 a.m. ET
Wal-Mart, Penney, Costco post gains; Federated, Sears down, Kmart warns.
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NEW YORK (CNN/Money) - Sales jumped at discount chains but came in generally weak for department stores last month, store chains reported Thursday, as consumers worried about their jobs and the recession again sought bargains.
Unseasonably warm weather in the fall and early winter hit department stores and clothing retailers with a double whammy. In addition, many retailers revised their earnings guidance, acknowledging that steep discounts pressured profits in the fourth quarter.
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CNNfn's Chris Huntington takes a look at December same-store sales numbers.
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Wal-Mart Stores Inc. said December sales jumped 8 percent at stores open at least a year. The world's biggest retailer said sales at its Wal-Mart stores rose 8.2 percent while Sam's Club warehouse store sales gained 7.1 percent.
Wal-Mart also said it expects yearly sales of more than $200 billion for the first time in its history, which could make it the biggest U.S. company by sales last year, eclipsing Exxon Mobil Corp.
Wal-Mart (WMT: up $0.39 to $56.79, Research, Estimates) stock rose in morning trading.
Sears Roebuck & Co. said sales fell 2.4 percent at stores open at least a year, and the No. 4 retailer also raised fourth-quarter earnings forecasts. The company, in the midst of an overhaul under new CEO Alan Lacy, now expects fourth-quarter earnings of $2.02 a share excluding one-time items, well ahead of the $1.91 analyst forecast.
Full-year earnings excluding charges are expected to be ahead of Street forecasts as well.
Sears (S: up $1.72 to $51.17, Research, Estimates) shares jumped on the news.
Troubled discounter Kmart (KM: down $0.70 to $4.10, Research, Estimates) Corp. said that same-store sales fell 1 percent in December and that it does not expect to meet Wall Street's fourth-quarter earnings estimates of 32 cents a share.
Troy, Mich.-based Kmart, whose stock was downgraded last week by Prudential Securities to a rare "sell" rating, also said it is talking with lenders regarding financing.
In downgrading the stock, Prudential said Kmart, which faces a stodgy image with consumers and fierce competition from Wal-Mart, could face bankruptcy if business does not improve.
Target Corp. (TGT: up $0.53 to $40.91, Research, Estimates), another discount chain, recorded a modest 0.6 percent increase in same-store sales and said it now expects fourth-quarter earnings per share moderately higher than Wall Street expectations of 65 cents, according to First Call.
The company said its core Target discount stores turned in a strong performance in the period but sales declined at its Marshall Field and Mervyn's department stores.
Meanwhile, troubled apparel retailer Gap Inc. (GPS: up $2.02 to $16.54, Research, Estimates) said same-stores sales tumbled 11 percent in December. The operator of Gap, Old Navy and Banana Republic stores repeatedly has missed fashion trends, hurting sales and adding to an already difficult selling environment for apparel chains.
The company also said it does not expect its fourth-quarter loss to exceed the 6 cents a share it lost in the third quarter. The current Wall Street consensus is for a loss of 12 cents a share, according to First Call.
Gap said December sales exceeded its own expectations but that margins came under pressure because of steep discounting, though they did improve somewhat toward the end of the month.
"Although business has been challenging, we are pleased with the progress we've made in improving our cash position and reducing our debt levels. At the end of the fourth quarter, we expect to have cash of about $800 million," Chief Financial Officer Heidi Kunz said.
Kohl's Corp., (KSS: down $0.02 to $68.99, Research, Estimates), a moderately-priced department store, reported a 9.8 percent jump in December same-store sales. Analysts repeatedly have cited Kohl's ability to turn in strong sales while preserving margins in a tough retail landscape.
May Department Stores (MAY: up $0.28 to $37.03, Research, Estimates), operator of Lord & Taylor, Hecht's, Filene's and other chains, posted an 8.9 percent drop in its same-store sales last month.
And J.C. Penney (JCP: down $0.29 to $26.24, Research, Estimates) said its December same-store sales jumped 5.4 percent as the company continued its turnaround efforts. Penney, which cited an improved merchandise mix and strong marketing efforts, said it remains comfortable with its previous full-year earnings guidance of 30 cents to 35 cents a share.
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Federated Department Stores (FD: Research, Estimates), operator of Macy's and Bloomingdale's among other department store chains, reported an 8.6 percent decline in December same-store sales, excluding a calendar shift that added selling days this year. However, Federated reaffirmed full-year earnings expectations of $1.85 to $2 a share, in line with forecasts.
Additionally, warehouse clubs Costco Wholesale Corp. (COST: up $0.35 to $44.50, Research, Estimates) and B.J.'s Wholesale Club Inc. (BJ: up $1.40 to $44.53, Research, Estimates) posted mid single-digit increases in their December same-store sales.
Meanwhile, specialty stores, particularly apparel boutiques, struggled with December sales.
Limited Inc. (LTD: up $0.37 to $16.37, Research, Estimates) posted a same-store sales decline of 1 percent in December but said sales and margins came in stronger than expected, and as a result it expects to exceed Wall Street's fourth-quarter earnings forecast of 51 cents a share, according to earnings tracker First Call.
Additionally, Intimate Brands Inc. (IBI: up $0.74 to $16.49, Research, Estimates), the operator of Victoria's Secret that is majority-owned by Limited, said its same-store sales were flat with a year ago and it expects the retail environment to remain challenging. Nevertheless, the company anticipates earnings to exceed forecasts of 43 cents a share for the fourth quarter.
Ann Taylor (ANN: up $0.87 to $35.88, Research, Estimates) and Goody's Family Clothing Inc. (GDYS: down $0.21 to $4.09, Research, Estimates) both reported lower same-store sales. 
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