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 The discounts boosted overall industry sales but hurt profits at
many chains, including L Brands Inc, Family Dollar Stores Inc and
teen retailer Zumiez Inc. Even retailers that reported big sales
gains, like Kay Jewelers parent Signet Jewelers Ltd, were not
spared.
Fewer store visits and aggressive pricing at the start of the season
by big retailers like Amazon.com Inc and Wal-Mart Stores Inc left
many chains with little choice but to offer sweeter deals. Many also
had too much holiday merchandise, which was ordered in late spring
when retail executives were feeling upbeat.
"The discounts needed to be deeper, and they needed to be longer,"
said Joel Bines, managing director of consulting firm AlixPartners.
The discounts did result in a stronger-than-expected 2.7 percent
increase in December sales at the eight retailers tracked by the
Thomson Reuters Same-Store Sales Index.
Still, L Brands cut its holiday-quarter profit forecast on
disappointing December sales at its Victoria Secret and La Senza
chains.
While L Brands' sales at stores open at least year rose 2 percent
last month, Wall Street had been expecting a gain of 3.7 percent,
according to Thomson Reuters I/B/E/S. The company's shares fell more
than 4 percent.
Zumiez reported an unexpected drop in same-store sales.
Shares of Signet, which is not part of the same-store sales index,
were down more than 6 percent even though it reported a 5 percent
increase in U.S. same-store sales for the November-December holiday
season.
Gap Inc, which is in the index, will report after markets close.
DEALS, AND MORE DEALS
Between November 3 and January 4, eight retailers, including
Wal-Mart Stores Inc, Target Corp and Macy's Inc, increased the
number of circulars published by 6 percent and sent 57 percent more
promotional e-mails, according to data prepared for Reuters by
MarketTrack.
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Retailers also had to deal with shoppers who were less willing to go
into stores: Data firm ShopperTrak this week said foot traffic had
dropped 14.6 percent this holiday season.
Walgreen Co, whose comparable sales of general merchandise rose 2.5
percent in December, said fewer shoppers had come to its drugstores.
Small clothing chain Cato Corp also slashed its profit forecast
after reporting poor December sales.
Still, some retailers offering staples at low prices fared well.
Warehouse club chain Costco Wholesale Corp reported a 5 percent gain
in U.S. same-store sales for December, while Wall Street was
expecting only 1 percent.
American Eagle Outfitters Inc said comparable sales for November and
December fell 7 percent and that it expected its quarterly profit to
come in at the bottom of its earlier forecast range of 26 cents to
30 cents per share.
Family Dollar's same-store sales fell 3 percent last month.
American Eagle and Family Dollar are not part of the same-store
sales index.
(Reporting by Phil Wahba in New York;
editing by Lisa Von Ahn)
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