The numbers are in and surprisingly some major retailers had a tough December. Chains like Target (NYSE: TGT) and Family Dollar (NYSE: FDO) felt squeezed, as consumers were unexpectedly cautious in their holiday spending. The iffy holiday economy also took a toll on small-cap retailers such as Wet Seal Inc. (NASDAQ: WTSLA) who said that it expects a fourth-quarter loss at or near the bottom of its prior forecast. Execs also noted same-store transactions fell 9.7 percent. Analysts had predicted a five percent decline for the business.
In what is usually the most important quarter of the year for retailers, Target’s same-store sales were, to a large extent, flat. Family Dollar Stores Inc’s same-store sales rose only about 2.5 percent in December, down more than 60 percent from the second quarter of 2012. Family Dollar Chief Executive Officer Howard Levine attributed the lagging sales to customers facing “increasing financial uncertainty”. Even with Wednesday’s sharp rally, which allowed Wall Street to open 2013 with its best showing in over a year, Family Dollar Stores Inc. stock dipped another 11 percent on the company’s lower than expected performance as its shifting emphasis on selling a greater quantity of daily items such as cigarettes and soft drinks put pressure on margins.
Although the holiday season was never expected to be record-breaking, even the single-digit growth predicted by retailers and analysts was strained as Sandy, the never-ending headlines about the “fiscal cliff” and the Connecticut school shootings affected shopper’s already uncertain moods. According to Thomson Reuters, analysts looked for an overall 3.3 percent same-store sales growth in December among 17 retail chains, down from 4.2 percent growth in December 2011.
Of course not all chains reported disappointing numbers. Costco (NASDAQ: COST) was an undisputed stand out with growth that topped everyone’s expectations. Food was Costco’s strongest category, as the wholesaler announced one of the stronger same-store sales reports, up a robust 9 percent topping analysts’ estimates for a 6.5 percent growth. Department store Nordstrom (NYSE: JWN) reported same-store sales that were more than double
Target (NYSE:TGT) and Family Dollar (NYSE:FDO) Holiday Sales Miss Markanalysts’ estimates, rising 8.6 percent. Kohl’s (NYSE: KSS) same-store sales rose 3.4 percent, beating expectations.
Clearly it was a challenging season for many chain retailers. Without doubt, economic uncertainty over the fiscal cliff played a larger role in consumer spending than experts had anticipated.