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Merchants Make December Gains

While December same-store sales reports were a mixed assortment, there was a clear enough positive trend, as even the comp sales laggards last week announced outlooks at the high end of previous projections — and several chains even revised their forecasts upward.

Overall, eight of the 13 major retailers tracked monthly by HTT showed positive comps. Among the 13, forecasts for Q4 and/or full year were increased by four companies, while two others said they anticipated results at the higher end of previous assumptions.

Off-price retailers roared along in December, with a 14% comp gain at TJX Cos. and a 12% comp gain posted by Ross Stores.

At TJX, where net sales for the five weeks ended Jan. 2 zoomed 21%, the company also reported an 8% gain for the 48 weeks year to date, to $19.0 billion. TJX raised Q4 guidance to a target of diluted earnings per share of 82 cents to 84 cents, which would be up 41% to 45% over last year's 58 cents. The company also increased its January comp expectations to 5% to 7%. TJX forecasts full year eps of $2.72 to $2.74, which would be up more than 30% from last year.

At Ross, vice chairman and ceo Michael Balmuth offered an upbeat note to his home furnishings vendors when he stated, “Shoes, home and dresses remained the strongest merchandise categories in December.” Balmuth added, “Based on our outstanding sales and margin results quarter-to-date, we are raising our fourth quarter 2009 earnings per share forecast. For the 13 weeks ending January 30, 2010, we now project earnings per share of $1.14 to $1.16, a 50% to 53% increase over the same period last year. This updated forecast also reflects our expectations for January same store sales to grow 6% to 7%, up from our prior projection for a 4% to 5% gain.”

While the December comp gain at 850-unit Macy's Inc. was considerably more modest, at 1.0%, this was a welcome increase in the long-battered department store tier of retail. “We achieved our sales goals for December despite the continued economic uncertainty,” said Terry Lundgren, chairman, president and ceo, who credited “our newly unified organization” and “our confidence to meet customer needs through the My Macy's localization strategy.”

Macy's increased its Q4 eps guidance to $1.14 to $1.18 (as always, excluding restructuring-related costs), compared to previous guidance of $1.00 to $1.05.

Tight inventory control was a major factor at 1,059-store Kohl's, which posted a sturdy 4.7% comp gain for the month. On its monthly sales recording, the company noted that “clearance units per store” are down about 22% from 2008, year to date. Even while assuming flat comps for January, Kohl's raised its Q4 eps guidance to $1.28 to $1.30 from the previous $1.14 to $1.24.

“Home experienced the weakest sales” across merchandise divisions, said JCPenney, where comps fell 3.8% in December and are down 6.5% year to date. JCP chairman and ceo Mike Ullman nevertheless stated, “Our team has been able to achieve significant gross margin improvement, control operating expenses, and enhance our cash flow metrics.” The 1,109-store retailer said it now expects fully year earnings of 77 cents to 82 cents per share, which is toward the higher end of its previous outlook of 70 cents to 85 cents.

The one major discounter that reports monthly sales results, Target, posted a comp gain of 1.8% for December, but home was apparently not the life of the party. Home, according to the Target sales recording, showed results below the company average, with a low single digit comp decline. Sales within home were “strongest in seasonal and holiday,” and weaker than the company average in the home decor category, Target stated.

Still, Target chairman, president and ceo Gregg Steinhafel noted, “We believe that our fourth quarter earnings per share will meet or exceed the current median First Call estimate of $1.11.”

Regional department store chain Dillards reported, “The sales performance in the home and other categories was significantly below trend,” and the company as a whole posted a comp decline of 7% for the month.

At 278-unit Bon-Ton Stores, Tony Buccina, vice chairman and president - merchandising, listed furniture and hard home among the “weakest performing businesses,” but did not mention soft home at all. With an overall December comp fall-off of 2.6% that it said was in part due to snow storms “on key selling days,” Bon-Ton pointed out, “Our e-commerce business continues to be the fastest growing segment of our company.”

Membership warehouse club Costco had a 4% overall December comp gain, excluding positive impact of gasoline prices and foreign currencies. Its northeastern regional rival BJ's saw comps slip 3.6% for the month.

While still-struggling 267-unit Stein Mart reported comps down 2.0% for the month and 5.8% year to date, the company did note that “the home area posted positive comparisons during December.”

Neighborhood discounter Fred's Inc., with 667 stores, earned a comp gain of 1.3%, putting it up 0.5% year to date.

Rural retailer Duckwall-Alco Stores showed a drop of 2.3% in December comps; the 258-store chain is off 0.6% year to date.

The 33-company Johnson Redbook Same-store Sales Index (SSI) for December climbed 2.7%, building on the 0.5% gain in November and a 2.1% rise in October. Off-price merchants Ross Stores and TJX Cos. were among four double-digit comp gainers. The index showed discounters weighing in with a 1.8% comp gain, while the department store segment posted a gain of 0.8%, its first positive result for 2009.

December Sales For Key Retailers
Five weeks ended Jan. 2 (dollar amounts in millions) a

2009 Sales 2008 Sales Total % chg. Same-store % chg.
N/A = not available
a. Reporting periods vary from chain to chain. Wal-Mart no longer reports monthly sales.
b. Costco: 5 weeks ended Jan. 3. Company total comps rose 9%; up 5% in U.S. and up 25% in international. Comp sales excluding positive impact from gasoline prices and foreign currencies were 4% (up 2% U.S., up 10% intl.).
c. Costco: 18 weeks. Total company comps for the period rose by 5%, up 2% in the U. S. and 17% in International. Comps excluding positive impact from gasoline prices and foreign currencies were up 3% (up 2% U.S., up 8% intl.).
d. Duckwall-ALCO: 5 weeks and 48 weeks ended Jan. 3.
BJ's Wholesale Club $1,162.3 $1,062.0 9.4 4.8
The Bon-Ton Stores $511.1 $527.2 (3.0) (2.6)
Costco Wholesale Corp. b $8,260.0 $7,410.0 11.0 9.0
Dillard's Inc. $1,006.0 $1,095.4 (8.0) (7.0)
Duckwall-ALCO d $65.1 $66.6 (2.3) (2.3)
Fred's Inc. $209.3 $201.4 4.0 1.3
J.C. Penney $2,889.0 $2,961. (2.4) (3.8)
Kohl's Corp. $3,014.0 $2,770.0 8.8 4.7
Macy's Inc. $4,426.0 $4,397.0 0.7 1.0
Ross Stores $934.0 $802.0 16.0 12.0
Stein Mart $170.2 $178.0 (4.4) (2.0)
Target Corp. $9,741.0 $9,280.0 5.0 1.8
TJX Cos. $2,900.0 $2,400.0 21.0 14.0
48 Weeks
2009 Sales 2008 Sales Total % chg. Same-store % chg.
BJ's Wholesale Club $9,212.0 $9,145.4 0.7 (3.6)
The Bon-Ton Stores $2,779.7 $2,958.0 (6.0) (6.1)
Costco Wholesale Corp. c $26,830.0 $24,930.0 8.0 5.0
Dillard's Inc. $5,539.2 $6,363.3 (13.0) (11.0)
Duckwall-ALCO d $452.4 $448.1 0.9 0.6
Fred's Inc. $1,663.0 $1,673.0 (1.0) 0.5
J.C. Penney $16,616.0 $17,503.0 (5.1) (6.5)
Kohl's Corp. $16,380.0 $15,669.0 4.5 0.2
Macy's Inc. $22,240.0 $23,679.0 (6.1) (5.8)
Ross Stores $6,773.0 $6,121.0 11.0 6.0
Stein Mart $1,155.3 $1,259.4 (8.3) (5.8)
Target Corp. $59,147.0 $58,736.0 0.7 (2.7)
TJX Cos. $19,000.0 $17,700.0 8.0 6.0

Winners and Losers
Same-store sales % change

Winners
TJX Cos. 14.0%
Ross Stores 12.0
Costco 9.0
BJ's Wholesale 4.8
Kohl's 4.7
Losers
Dillard's -7.0
JCPenney -3.8
Bon-Ton Stores -2.6

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