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Happy holiday for retailers
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January 6, 2000: 1:35 p.m. ET
Discount, high-end stores lead gains as some toy, department stores struggle
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NEW YORK (CNNfn) - U.S. retailers registered solid holiday sales figures Thursday as consumers flocked to discount and high-end chains, but proved more selective when shopping traditional department stores.
Some of the nation’s largest store chains, including Wal-Mart Inc., Federated Department Stores Inc. and Kmart Inc., posted healthy, if unspectacular, revenue growth during the holidays, which generally generate up to half a retailers’ profit for the year.
But some other well-known names continued to struggle, including J.C. Penney Co., one of the nation’s oldest department store chains, and Toys "R” Us Inc., one of the world’s largest toy retailers.
"It really is about in line with what we expected,” said Steven Kernkraut, a retail analyst with Bear Stearns. "I think overall it was a very good Christmas, but it clearly was not the tide that lifted all retailers.”
Wal-Mart leads the way
Department stores once again were led by discount chain Wal-Mart, which not only attracted price-conscious gift shoppers but also benefited from Y2K-leery consumers who stocked up on everything from toilet paper to canned goods during December’s final days.
Wal-Mart Stores Inc. (WMT), the nation’s largest retail chain, reported a 9.1 percent increase in same-store sales for the five weeks ended Dec. 31, led by its Sam’s Club warehouse stores, which posted a 14.2 percent increase in comparable-store sales.
Overall, Wal-Mart posted net sales of $24.13 billion during December, an increase of 26.2 percent from the $19.11 billion a year earlier.
Wal-Mart competitor Dayton Hudson Corp. (DH), the parent company of Target stores and the nation’s No. 5 retailer, grew same-store sales 5.6 percent during December, despite year-to-year revenue declines at its Mervyn’s chain.
Other chains benefiting from Y2K-related shopping, according to analysts, included BJ’s Wholesale Club Inc. (BJ), which posted a 14.7 percent increase in same-store sales, and discounter Dollar Tree Stores Inc. (DLTR), which recorded a 5.6 percent increase.
Traditional department store chains were led by Federated Department Stores Inc. (FD), the parent company of Macy’s, Stern’s, Bloomingdale’s and others, which reported a 6.4 percent increase in comparable-store sales during December.
Kmart Inc. (KM), the nation’s No. 3 retailer, reported comparable-store sales increased 5.5 percent during the holidays, while net sales grew 7 percent to $5.88 billion.
Other department store chains reporting solid same-store holiday sales figures included Kohl’s Corp. (KSS), up 7.8 percent, and Saks Inc. (SKS), up 5 percent.
But a handful of traditional retailers struggled, including J.C. Penney Inc. (JCP), which posted a comparable-store sales gain of only 0.5 percent during December while overall sales rose only 0.2 percent to $2.62 billion.
Company officials blamed the sluggish results on weak sales in men’s athletic apparel and juniors. But analysts said the results highlight the struggle many traditional, old-line department stores face as they attempt to reinvent their brand among consumers and boost profits.
A prime example is Sears, Roebuck & Co. (S), which warned of lower holiday sales Tuesday, but said it fourth-quarter profits would be higher than expected because it scaled back on promotional advertising during the holidays.
"A lot of retailers took a more studied view to not go for a big sales number during the holidays and instead go for big profits,” Kernkraut said.
Other big retailers posting sluggish comparable- store gains during the holidays included May Department Stores Co. (MAY), up 2.2 percent, and Dillard’s Inc. (DDS), up 2 percent.
The news also wasn’t good at Toys "R” Us Inc. (TOY), the nation’s largest specialty toy retailer, which posted flat 1999 holiday sales of $4.4 billion, while comparable U.S. store sales actually decreased 2 percent.
Company officials blamed the decline on industry pressures, the deflationary impact of video hardware sales and shortages of certain video and electronic products. The company also later significantly lowered its earnings outlook for the year.
Consumers boost hi-end shops
The most dramatic surge in holiday spending benefited several hi-end and specialty retailers, who generally posted double-digit sales increases during December.
Jewelry and specialty retailer Tiffany & Co. (TIF) reported a 28 percent increase in net sales and a 27 percent increase in same-store sales during December, causing the company to significantly raise its fourth-quarter earnings projection.
Tiffany officials raised their earnings outlook for the three-month period ended Jan. 31 to $1.08 per share. Previously, company officials said they expected to earn 88 cents per share, up from 74 cents last year.
Likewise, Zale Corp. (ZLC), the nation’s largest jewelry retailer, said its same-store sales grew a record 16.3 percent during November and December, while overall sales jumped 31.2 percent to $504.7 million.
Among specialty apparel retailers, Gap Inc. (GPS) reported same-store sales up 5 percent during December, down significantly from the 18 percent gain it recorded last year.
Spiegel Group (SPGLA), parent company of the Eddie Bauer chain, reported a 6 percent increase in December comparable-store sales, while Limited Inc. (LTD) recorded a 5 percent increase.
Electronics retailers also fared well. Tandy Corp. (TAN), the parent company of RadioShack stores, recorded a 6 percent increase in comparable store sales, driven by strong increases in wireless phone and satellite dish sales.
And Circuit City Stores Inc. (CC) reported December same-store sales rose 6 percent, while overall sales jumped 12 percent to $1.45 billion. 
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