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Retail sales show healthy rise
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January 7, 1999: 10:21 a.m. ET
December same-store sales rose for most discount and department stores
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NEW YORK (CNNfn) - With the exception of J.C. Penney, the nation's leading discount and department stores posted mostly healthy gains in December, helped by strong holiday spending and continued demand for fashion and home-improvement products.
Comparable store sales at Wal-Mart Stores (WMT), for example, rocketed 9.4 percent for the month, while Kmart's (KM) same- store sales rose 4.2 percent, buoyed by last-minute holiday spending.
"Strong performance over the final weeks of the holidays helped Kmart's sales for December meet expectations," said Floyd Hall, Kmart's chairman, president, and chief executive. "Categories showing particular strength included home-related items in areas such as appliances, decor, fashions and electronics, as well as do-it-yourself, consumables, stationery, prescription drugs, and seasonal items."
Department stores
The two discounters, it appears, took in all the customers that J.C. Penney (JCP) lost.
The Plano, Texas, mass merchandiser, which has struggled in recent months, saw sales at its department stores open at least a year drop 7.6 percent for the month. Catalog sales fell 8 percent.
"Heavy promotional activity in the department stores and catalog to date is resulting in increased markdowns which, combined with lower sales volume, is having a significant negative impact on gross margin," the company said.
The company said fourth-quarter earnings per share are likely to be between 70 cents and 80 cents, and full year 1998 earnings per share should come in around $2.12 to $2.22 after charges.
At the same time, Dayton Hudson (DH), owner of Target stores, turned out better-than-expected results for the month, posting a 6.5 percent comparable-store sales increase over last year.
"Sales in December were above plan at each of our divisions," said Bob Ulrich, chairman and chief executive officer of Dayton Hudson Corp. "We are pleased with our overall results for the holiday season."
On a comparable-store basis, Federated Department Stores (FD) also saw its December sales climb 5.7 percent. Federated owns a number of department stores, including Macy's and Bloomingdale's.
May Department Stores Co. (MAY) saw its store-for-store sales climb 4.4 percent as well.
Elsewhere in the retail sector, specialty clothing chain The Gap, Inc. (GPS) continued its winning streak with a 19 percent jump over year-ago results.
Comparable-store sales at The Limited, Inc. (LTD) increased 4 percent for the five weeks ended Jan. 2, 1999.
While the industry itself was predicting a soft holiday sales season, with 4 percent gains, BT Alex. Brown analyst Patrick McCormack said the overall numbers came in higher than that.
"The numbers were very strong," he said. "When Christmas sales were first reported some folks indicated they didn't think it was a good Christmas, which surprised me. I think it was very good."
December same store sales for the industry were up about 5 percent to 6 percent, he said.
"It was a good performance, and for discounters it was very good," McCormack said. "Unemployment is low and consumer confidence is high. Despite all the controversies and troubles in the world, the American consumer is still very strong."
But reversing a trend that had gained momentum throughout 1998, Dollar General Corp. (DG) posted a 1.1 percent drop in same-store sales for the five weeks ended Jan. 1, 1999, down significantly from an increase of 8.1 percent in the year- ago period.
"Our December sales sustained two significant impacts in weeks one and four. Our one remaining advertising circular was eliminated the first of December, with an expected sales impact. However, severe winter weather in our busiest week was certainly unplanned!" said Cal Turner Jr., chairman and CEO.
Even so, he said, the store still had its most profitable December in history, with year-to-date total sales up 23 percent to $3 billion. 
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J.C. Penney
Kmart
Wal - Mart
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