December was a cold month for retail sales
Major retailers reported dismal December sales Thursday, stepping up store closings and making new bankruptcy filings likely in coming months.
Department and specialty stores were the hardest hit, but the recession is starting to take a toll on discounters. Wal-Mart (WMT), about the only retailer to increase sales, had a worse-than-expected 1.7% sales jump. The discounter warned investors Thursday that its fourth-quarter profit will be lower than it predicted, and that January sales may be flat.
Almost all retailers have posted declining sales for several months.
Macy’s (M) said its sales were down 4% and announced plans to close 11 stores — from Indianapolis to Palm Beach, Fla.
Warnings by regional department store chain Gottschalks that it could run out of cash by month’s end became public this week. Gottschalks’ sales were down 9.6%. Bon-Ton Stores (BONT), another regional department store, posted dire results, too, with sales down 5.8%.
Jeff Green, a sales forecaster and strategic analyst for malls and retailers, expects more closings for Macy’s, which acquired the former May Department Stores in 2006. He also questioned whether Gottschalks and Bon-Ton can survive without filing for Chapter 11 bankruptcy protection.
Still, retail research and consulting firm TNS Retail Forward saw some promise in the numbers — which overall were down 1.5% from December 2007. December was better than November, Retail Forward noted, and was affected by bad weather and less-favorable exchange rates for tourists.
“These results provide signs that retail weakness may be bottoming out,” says Retail Forward senior economist Frank Badillo.
January and February are typically the slowest retail sales months, however, so the dire holiday season prompted some retailers to move quickly:
•Women’s clothier New York & Co. (NWY) announced it would close up to 50 of its 600 stores.
•The family clothing chain Goody’s will begin liquidating its remaining 287 stores today.
•The hip-hop apparel chain Against All Odds filed for Chapter 11 this week and said it will liquidate some of its nearly 70 stores.
Neiman Marcus posted the worst monthly declines of the retailers reporting, with sales down 27.5% over December 2007. Saks Fifth Avenue (SKS) dropped 19.8%, and Nordstrom (JWN) was down 10.6%.