Modest and mixed were the key words for December as retailers dealt with a changing retail landscape that saw even more consumer dollars shift to online spending and gift cards this year. Luxury retailers and wholesale clubs were again the big winners for the month, a relief for many that saw the slowdown in luxury sales in November as a potential precursor to broader weakness in the market.
Based on a monthly survey of 66 chain stores by the International Council of Shopping Centers, the five-week month of December netted a 3.2% increase in comparable store sales, resulting in a 3.5% increase for the two-month holiday period. The gain for December was weaker than Novembers 3.8% increase, but was a marked improvement from last years 2.7% increase for the December period.
Michael P. Niemira, ICSC's chief economist and director of research, had forecast a 3.5% increase in comps for December, but the overall holiday sales performance came in at the top end of ICSCs forecast for a sales increase in the 3.0% to 3.5% range.
Hibbett Sporting Goods shares initially took a hit, but moved back to flat for the week after the small market sporting goods retailer reported a 1.7% comparable store sales gain for the nine-week holiday period through December 31. Comps had risen 5.0% for the holiday period last year. Total 2005 holiday net sales increased 11.9% to $90.6 million, compared with $81.0 million for the comparable period last year.
Company chairman and CEO Mickey Newsome said that footwear and apparel were positive while equipment was negative. He said a clean inventory position enabled them to reduce promotional activity and improve product gross margins.
Based on the holiday results and HIBBs merchandise plan for January, the company confirmed its previously issued diluted EPS guidance of 27 cents to 29 cents per share for the fourth quarter of fiscal 2006.
“With December comps higher than November and with exciting footwear launches and other new spring merchandise being delivered to our stores, we expect sales momentum to continue building in January,” said Mr. Newsome.
Based on the ICSC survey, total Footwear Store comps were up 2.8% for the month, thanks to another solid month from Shoe Carnival, after declining 1.4% in the year-ago period.
Shoe Carnival comps were up 10.6% for December on top of a 1.1% gain last year. Total net sales increased 12.8% to $72.5 million from sales of $64.3 million in the year-ago month. While the womens business was still a key driver for the month, growing nearly 20% for December on a comp sales basis, mens topped the other categories with a comp sales gain in excess of 20%, led by strength in casual shoes. The casual category also includes the fashion athletic Euro casual looks. Childrens comps, which include childrens athletics, was up in mid-singles. Mens and womens athletics were also up in mid-single-digits for the month. Total footwear sales comped up 11.7% for December. Accessory comps were up in mid-singles. The retailer also announced the closing of two stores during the month.
DSW Inc. saw comp sales for the month close in on the double-digit mark, posting an increase of 9.9% for the month. December net sales increase 20.7% to $114.3 million from last year's net sales of $94.7 million.
Payless ShoeSource helped push the total Footwear Store index lower, reporting a 1.5% decline in comparable store sales for the month on top of a 3.0% decrease last December. Total net sales totaled $264.3 million, a 3.2% decrease from $273.1 million during fiscal December of last year. The retailer said results for the month were “impacted by stronger than expected November sales and timing shifts in receipt flows, which reduced inventory levels in the stores.” But they feel the lower inventory levels, combined with less aged product, will “facilitate a cleaner transition into the spring season.” They still see low-single-digit same-store sales growth for the quarter.
At the end of fiscal December, 26 stores remained closed from the impact of hurricanes Katrina, Rita, and Wilma.
Shoe Pavilion posted a 5.5% comp sales gain for the fiscal fourth quarter on top of a 14.7% increase in the year-ago quarter. Net sales increased 18.9% to $29.5 million for the period, compared to net sales of $24.8 million for the same quarter last year. Comps were up 6.9% for the year, helping push the retailer over the $100 million mark for the first time. Full year total net sales increased 19.5% to $102.5 million.
Teen retailers were again a mixed bag for the month as this very fickle group of consumers shifts with quickly changing fads and fashions.
Zumiez Inc. may have seen a boost from more seasonal winter weather and its focus on snowboard as December sales increased 43.5% to $44.5 million, compared to $31.0 million for the same month last year. The company's comparable store sales increased 20.9% for the month on top of a 16.2% jump in the year-ago period.
The growth came throughout the month, but was especially strong in the week before Christmas. Comparable store sales increased 18.6%, 16.5%, 14.2%, 38.2%, and 8.6%, respectively, for the five weeks of the fiscal month. Management attributed the strong month to “new stores, an increase in comparable store transactions, and an increase in average unit retail.” All departments posted positive comp sales, with men's sales leading the way.
Based on these stronger than expected results, the company now sees diluted earnings per share to be approximately 90 cents in fiscal 2005, an increase from previous guidance of diluted earnings per share of 84 cents to 85 cents, and fiscal 2004 earnings of 56 cents per diluted share.
Pacific Sunwear saw a 1.5% comp sales increase for December at its PacSun surf/skate lifestyle format offset a bit by a 2.3% comp decrease at its d.e.m.o. suburban hip-hop format. Total company comps were up 1.0% for December and total company sales increased 10.9% to $242.4 million from total sales of $218.6 million in December last year.
The average ticket per comp store was up in mid-singles, driven by a low-single-digit gain in average unit retail and a low-single-digit increase in average units sold. Total transactions per store were down in low-singles.
The d.e.m.o. comp sales decline was driven by a low-double-digit decline in the guys business, offset a bit by continued strength in the girls business, which was up in the high-singles.
At PacSun, the guys business was up in mid-singles on a comp basis in December, driven by basic denim, track jackets, t-shirts, polos, and accessories. Wovens, sweaters, and sneakers were said to be weak. The girls business, which comped down in mid-singles for the month, was driven by knit tops, basic denim, sweaters, and accessories, offset a bit by weakness in fleece, footwear, tees, and fashion denims.
The Buckle saw December 2005 sales increase 4.1% to $82.8 million from sales of $79.5 million in the corresponding five-week last year. Comparable store sales declined 1.3%.
But it was again the Luxury Stores that led the gainers for the month, with a 6.4% increase for the channel. The channel average would have been even higher had ICSC included the results from Neiman Marcus, which posted an 8.6% comp sales gain for the period. Nordstrom was up 7.7% for the month, while Saks Fifth Avenue rose 3.1% for December.
Wholesale Clubs were up 5.2% for the month, with Costco leading the channel with a 7.0% increase for the month.
ISCSs Niemira said he anticipates a same-store sales rise of 3.0% to 3.5% for January.
