(Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, said December sales climbed 2.4 percent, higher than analysts' estimates. Limited Brands Inc. cut its fourth-quarter profit forecast after sales declined during what may have been the worst holiday season since 2002.
Women's clothing retailers AnnTaylor Stores Corp., Chico's FAS Inc., and Cato Corp. also projected earnings less than analysts' estimates after December sales at stores open at least a year fell.
A drop in customer visits at American Eagle Outfitters Inc. and other retailers have hurt profit. Consumers facing $3- a-gallon gasoline and the worst housing market in 27 years reined in spending and only bought items on sale. Stores typically count on November and December for about a fifth of their annual sales.
``It's a very challenging period for the retailers,'' Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia, with $77 billion in assets including retailers' shares, said on Jan. 8. ``The sales numbers obviously don't look that great, and the promotional activity in most cases was above last year, so margins are probably going to suffer.''
The International Council of Shopping Centers on Jan. 8 said same-store sales in November and December probably increased ``a little under'' its 2.5 percent forecast. Same- store sales are considered a key measure of a retailer's performance because they exclude locations that have recently opened or closed.
Food, Drugs
Discounters benefited as cash-strapped consumers sought out lower prices. Wal-Mart's December gains were driven by sales of food, prescription drugs and consumer electronics. The results were within the company's forecast of a 1 percent to 3 percent increase and beat analysts' estimates of a 1.8 percent rise.
Costco Wholesale Corp., the largest U.S. warehouse-club chain, said December sales at stores open at least a year rose 7 percent, exceeding analysts' projections for a 5.5 percent gain. TJX Cos., which sells designer clothes at discounted prices at its Marshalls chain, raised its fourth-quarter forecast.
American Eagle, the U.S. retailer of clothes for 15- to 25-year-olds, fell 6 cents to $17.72 yesterday in New York Stock Exchange composite trading. Limited Brands, based in Columbus, Ohio, dropped 4 cents to $15.69. Wal-Mart, based in Bentonville, Arkansas, climbed 93 cents, or 2 percent, to $46.90.
The Standard & Poor's 500 Retailing Index rose less than 1 percent to 375.15 yesterday. The index has dropped 8.5 percent this year through yesterday following an 18 percent decline in 2007.
Macy's Falls
Macy's Inc., the second-largest department-store company, said sales dropped 7.9 percent, missing analysts' estimate for 6.4 percent fall.
``Macroeconomic trends led customers to spend cautiously for the holiday,'' Chief Executive Officer Terry Lundgren said in a statement.
Gap Inc., the biggest U.S. clothing retailer, said same- store sales fell 6 percent, more than double Retail Metrics LLC's estimate for a 2.4 percent decline. Abercrombie & Fitch Co. said comparable-store sales retreated 2 percent. Analysts estimated a 0.9 percent decline.
December sales may have gained at a pace slower than the council's 1.5 percent estimate as shoppers waiting for discounts spent less at the beginning of the month, Michael Niemira, the ICSC's chief economist, said last week.
A calendar shift moved a week of holiday sales into November from December, hurting last month's results and helping November post a 3.5 percent increase.
