Nordstrom, Costco report higher December sales
A last-minute buying binge by holiday shoppers improved results for the Northwest-based retailers.
Seattle Times staff and news services
Northwest retailers Costco and Nordstrom reported strong December sales Thursday, boosted by a last-minute surge in holiday shopping.
Nordstrom had a particularly strong December, with sales at stores open at least a year up 8.6 percent, more than double the 3.4 percent analysts expected. The Seattle-based company said sales surged in the last week of the season, as shoppers had a full weekend before Christmas, which fell on a Tuesday.
Analyst Liz Dunn of Macquarie Group in New York said Nordstrom benefited from an affluent customer base, as well as a large presence on the West Coast, where the impact of superstorm Sandy was less of a concern.
“I think their customer feels better because the value of their home is moving up,” Dunn said. “Nordstrom’s customers are not so concerned with stock fluctuations, but they certainly are cognizant of the fact that the housing market has bottomed out.”
Issaquah-based Costco posted a 9 percent gain in sales at stores open at least a year, well above expectations of 6.5 percent growth. The company said an extra day in the December reporting period compared with last year lifted total sales by 2 percent.
Consumers had a lot to worry about this holiday season, including cleanup after Sandy and the possibility of the U.S. economy falling off the “fiscal cliff,” triggering massive budget cuts and tax increases that would mean much less money in Americans’ pockets.
But after spending cautiously during most of the season, they loosened their purse strings in the final shopping days.
“I wouldn’t be doing cartwheels that it was particularly great or strong holiday season, but it could have been worse, given the headwinds,” said Ken Perkins, president of RetailMetrics, a research firm. “The government and Mother Nature were not as cooperative as retailers would have liked. But it was definitely not as bad as feared.”
Twenty retailers reported that revenue at stores open at least a year rose an average 4.5 percent in December compared with a year ago, according to the International Council of Shopping Centers. That’s on the high end of the expected range of 4 percent to 4.5 percent.
Lynnwood-based Zumiez, which sells skate- and surf-inspired clothing, posted a 1 percent drop in sales at stores open at least a year, better than the 3.6 percent decline Wall Street predicted.
Only a small group of chain stores representing about 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue.
The list excludes Wal-Mart Stores, the world’s biggest retailer.
But the data still offer a snapshot of consumer spending, which accounts for 70 percent of all economic activity.
Jennifer Black, a Lake Oswego, Ore., retail analyst who advises large institutional investors, said Nordstrom was one of the season’s strongest performers partly because of its customer-loyalty program.
She added that there did not appear to be any must-have fashion trends that drove shoppers into stores.
“You keep getting Nordstrom notes, and you keep going to their stores to spend your notes,” Black said of the program. “They burn a hole in most people’s pockets.”
Overall, sales for the combined months of November and December rose 3.1 percent, slightly above the 3 percent rise the shopping-center council had predicted.
The numbers provide a brighter picture than mid-December sales reports, which painted the season as the worst since 2008.
It ended up being a season of fits and starts, with healthy spending followed by stretches of tepid growth.
The late surge might have been driven by a last-minute increase in markdowns, said Chris Donnelley, global managing director of Accenture’s retail practice.
“The retailers that we work with put more things at 30 percent to 40 percent off on the last weekend before Christmas than they wanted to,” Donnelley said. “The volume of product on promotion was a lot higher than anticipated.”
Last-minute promotions may have spurred sales, but unplanned discounts can erode profit margins. Several retailers cut their fourth-quarter guidance due to promotions.
Kohl’s, for example, said its December sales at stores open at least a year increased 3.4 percent, beating Wall Street forecasts. But the retailer said the growth came from heavy discounts, and it cut its profit outlook for the current quarter and full year.
Barnes & Noble had a particularly gloomy holiday, with revenue in stores open at least a year down 8.2 percent during the nine-week holiday period ending Dec. 29.
The company’s Nook e-reader sales fell short of expectations, and Barnes & Noble said it planned to review its strategy for the device.
Seattle Times business reporter Amy Martinez and Associated Press retail writer Mae Anderson contributed to this story.