Retail sales numbers - 12:08 pm

From CNBC - Retailers See Stronger Profits as Sales Strengthen

CNBC.com
| 07 Jan 2010 | 11:05 AM ET

Retailers reported stronger than expected sales gains in December despite prior indications that consumers remained very deliberate in their spending over the holidays.

According to Retail Forward, same-store sales, excluding Wal-Mart Stores, were up 3 percent in December as shoppers gave a particular boost to apparel spending during the holidays.

Thomson Reuters said about 75 percent of the retailers reporting monthly sales results topped analysts' estimates.

Since retailers had been planning for cautious consumer spending and remained very disciplined with their discounting throughout the holiday season, several retailers were able to raise their earnings forecasts on the strength of these sales.

This is significant as prior increases in earnings estimates had mainly come on the back of cost cutting and productivity improvements.

"Considering the holidays were competitive on price and analysts' estimates heightened, to see the magnitude of the guidance revision was striking," said Wall Street Strategies analyst Brian Sozzi. "Management teams are operating at a high level, driving supply chain savings and keeping inventories lean. But, for the first time in a while, greater-than-expected sales trends appear to be a factor in stronger than previously thought fourth-quarter earnings."

Among those increasing earnings estimates were department store Macy's , teen apparel retailers Zumiez and American Eagle Outfitters , Victoria's Secret owner Limited , and discounters Target and Ross Stores .

Many of these estimates were well-above analysts' forecasts, including that of Sears Holding . Sears shares hit a 52-week high after the company said strong sales at Kmart prompted the company to raise its earnings forecast for the current quarter to a range of $3.36 to $4.06 a share, compared with the $2.65 a share average estimates from Thomson Reuters.

Another encouraging sign was strong results at high-end department stores Saks and J.W. Nordstrom .

Despite these rosy reports, there were some retailers who are continuing to struggle.

Among apparel retailers, results have been mixed. Some teen apparel retailers have posted robust sales, while others showed anemic results. Buckle , for example, saw its same-store sales increase by 6.6 percent, far outpacing the 2.1 percent estimate. But Hot Topic , which had been expected to report a 8.6 percent decline in same store sales saw a deeper decline of 10.9 percent.

Department store results remained weak. J.C. Penney saw its same-store sales decline 3.8 percent, essentially in line with estimates.

Bookseller Barnes & Noble lowered its third-quarter forecast on Thursday, citing weak sales over the holiday.

Barnes & Noble did see some pockets of strength. There was strong demand for its Nook electronic reader, but it sold out of its initial supply, limiting the impact of this trend. The retailer also saw strong online sales growth, with sales at barnesandnoble.com up 17 percent.

Strong online sales were common trend, Sozzi said. Among those companies sharing such data, online sales were up an average of 16 percent, he estimates.

Although the monthly retail sales results are being closely watched for the signals they provide about the holiday season, some key players don't report monthly sales results. These companies include Wal-Mart Stores and Best Buy , among others.

Below is a summary of the retailer results:

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