California Apparel News

For many retailers, December retail sales were up—but not enough.

“December sales were below expectations, as strength in grocery and apparel was offset by softness in electronics, toys and some home categories,” said Gregg Steinhafel, chairman, president and chief executive officer of Target Corp. “Sales in some key gift-giving categories moved earlier into the holiday season, and lower-margin items drove a higher portion of sales than expected. Target reported a same-store-sales increase of 0.9 percent. Macy’s reported a 3 percent increase in comp-store sales but was expecting more. Off-price stores continued to report solid gains—a 4 percent increase in same-store sales at Ross Stores and a 2 percent increase at TJX. Among the winners were Saks Inc., which saw same-store sales rise 11.8 percent, and Nordstrom, which reported an increase in comp-store sales of 8.4 percent. Teen retailer The Buckle also had a strong season, with same-store sales rising 6.1 percent. But Gap Inc. stumbled, reporting a 6.7 percent loss in same-store sales. December ended on a decent note for mall-based retailer Hot Topic. The City of Industry, Calif.–based company reported a December same-store-sales decline of 1.7 percent. In the same time last year, its same-store sales declined 10.9 percent.

Still, December’s solid sales followed the good business reported in October and November. And apparel performed better than other merchandise categories. When December was over, MasterCard Advisors’ Spending Pulse macroeconomic report reported total apparel sales among the month’s big winners. Total apparel sales increased 10.9 percent in a year-over-year comparison.

The Spending Pulse report noted that because December 2009 was a modest month for sales, increases over last year were not difficult.

The month’s sales were fueled by pent-up demand for apparel, said Liz Pierce, a retail analyst for financial-services company Roth Capital Partners. Higher gas prices and heavy rains in Southern California as well as a major snowstorm in the Northeast may have stopped retailers from reaching their fullest sales potential in December, she wrote in a Jan. 4 research note.

The New York–based International Council of Shopping Centers reported that, overall, retailers posted a 3.1 percent gain in same-store sales in December. The 2010 holiday season (measured as November and December sales combined) was the strongest since 2006, with a sales increase of 3.8 percent, according to the ICSC.

“Performance for the month of December was good, but uneven, with apparel specialty stores feeling more promotional pressures coupled with some weather issues that cut into their sales,” said Michael P. Niemira, chief economist and director of research for ICSC. “While the December gain didn’t reach the high end of expectations, the increase did help make this year’s holiday spending season the strongest in recent years, which is welcome news for retailers.”

Niemira said January sales are likely to be “somewhat subdued,” with less gift-card redemption than last year.—Andrew Asch