US retailers enjoy like-for-like holiday sales growth

11 January 2010

NEW YORK: Many US retailers are becoming more optimistic about their prospects going forward, having seen sales levels rise during the final month of 2009.

A survey by Thomson Reuters of 30 firms in the American retail sector found that sales improved by 2.9% in the five weeks culminating on 2 January this year.

Macy's, the department store chain, saw its like-for-like figures increase by 1%, and has now raised its earnings forecast for the fourth quarter, having avoided implementing heavy price cuts.

Terry Lundgren, its chief executive, suggested "there is more stability and more visibility" in the market than was previously the case.

"Last year, it was like we were all falling off a cliff, grabbing for vines to catch on to something, because we couldn't really see what was happening," he added.

Sears' comparative totals climbed 0.4%, boosted by an uptick of 5.3% at Kmart, and the company has also begun to place greater focus on its online "marketplace" at

Having opened this platform to third-party vendors, some 10 million items are now available to web users from a variety of sources.

Imran Jooma, svp, online, at Sears Holdings, said the "ability to compare offers for the same item across other sellers [means] our customers will be better informed to make the best decision for themselves."

Costco was up by 9% in December, a rate of expansion that fell to 1.8% for Target, but both of these organisations came in ahead of analysts' expectations.

Gregg Steinhafel, ceo of Target Corporation, said "comparable-store sales were much better than expected, as stronger-than-anticipated guest traffic throughout the month drove sales growth in a broad array of merchandise categories."

These included apparel, electronics, toys, food and health and beauty, and Steinhafel expressed confidence that the Minneapolis-based firm would "generate stronger-than-expected fourth quarter profit."

Aeropostale, American Eagle and Gap all similarly posted stronger returns than in December 2008, with the last of these firms having run its first TV ads for around two years at the close of 2010.

High-end specialists like Nordstrom, Neiman Marcus Group and Saks also saw annual growth of between 7% and 10% over the same period.

Eric Beder, an analyst at Brean Murray, Carret & Co, said "we're actually to starting to see the return of the customer who will pay full price for differentiated product".

At the other end of the spectrum, Abercrombie & Fitch, the teen-targeted apparel chain, registered a decline of 19%, despite having placed a heavy emphasis on promotions.

Limited Brands, which owns Victoria Secret and Bath & Body Works, was down by 2%, while Hot Topic was off by 11%, and JCPenney by 4%.

Beder also sounded a broader note of caution, arguing "the saving grace for most retailers remains low expectations and easy comparisons; we remain worried about rising inventories and expectations for 2010".

In-keeping with this trend, a poll of US consumers by Zogby International has reported that 40% of shoppers predict they will have less disposal income at the end of 2010 than at the beginning.

Some 47% further agreed that their personal financial situation had deteriorated over the course of last year, as the financial crisis tightened its grip.

More positively, the International Council of Shopping Centers has forecast that retail sales will grow by between 3% and 3.5% this year.

Michael Niemira, the organisatio

Data sourced from Wall Street Journal, Reuters, AdAge; additional content by Warc staff