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Promotions boost same-store sales

Traffic was driven by deeper discounts, putting further pressure on weakened margins

NEW YORK Given a lift by last-minute shoppers and bargain-seekers, same-store sales moved up by 1.5 percent during the fourth week of December, pushing overall retail sales for the first four weeks of the month ahead of expectation, but still somewhat beneath last year's dismal level, the widely watched Redbook Retail Average reported.

Predictably, the nation's mass merchants continued their strong performance with a 4.5 percent increase for the week, but department store sales, while improving, still fell 1.8 percent behind last year's sales levels.

"Sales improved substantially for the Christmas week as traffic counts were up from the previous period, and the average purchase was larger," said Redbook analyst Catlin Levis. "Most of our sample companies reported sales that were at or above plan. With one more week to go in fiscal December, retailers' overall results for the month were above their modest expectations."

Levis added, "The Christmas week provided the type of sales gains many retailers had been waiting for to bring their December more in line with revenue growth expectations. Some reported stellar gains and found themselves back on plan, or close to it, after several months of sub-target activity, while certain retailers did not share in the good fortune. Like last year, shoppers who had held back throughout the month came in a rush in the days leading up to the 25th and again in the days immediately following."

A cold snap served to reinforce the pattern, especially in the Midwest and the East Coast, Levis noted. However, "The primary focus during the fourth week … was on holiday seasonal business, dominated by gift and holiday categories, including DVD players, game consoles, toys, electronics, jewelry, home goods and decorative arts. Food was also a big seller for certain discount stores."

While traffic was heavier during the fourth week of the holiday season, it was largely driven by deeper markdowns and special promotions, raising questions about fourth-quarter profits for an already challenged retail sector. "The result was stronger sales but probably further damage to already weakened margins," Levis observed.

Redbook Retail Sales Average
Fourth week of December

Week ended 12/8 12/15 12/22 1/5 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Retail Sales Average, a unit of Instinet, a Reuters company.
Department Stores* -5.0 -5.5 -4.5 -1.8 -4.2 -5.6
Discounters 2.7 2.5 2.8 4.5 3.1 2.8
Redbook Average -0.9 -1.2 -0.6 1.5 -0.3 -1.2


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