Retailers Rally with December Comps

By Don Hogsett -- Home Textiles Today, 1/8/2007 12:00:00 AM

New York —

Same-store retail sales delivered an 11th-hour surge during the fifth and final week of December, climbing by 3.2% and putting most U.S. retailers on or slightly ahead of plan during the closing week of the year, the Johnson Redbook Index reported.

But even with the relatively strong finish, sales for all of December just missed the mark, the Redbook Index reported, rising by 2.8%, slightly beneath a hoped-for 2.9% increase.

"Retailers reported relatively strong sales in the final week, in part due to an extra selling day compared to last year before Christmas," said Redbook analyst Catlin Levis. "Customers were flocking to stores for last-minute shopping and taking advantage of deep markdowns. Store traffic counts on the days after Christmas remained relatively high as consumers were drawn into stores to exchange and return gifts, redeem gift cards, and hunt for bargains on winter wear."

Gaining steadily throughout the month, department-store sales surged by 4.8% during the closing week, improving on a 4.5% increase the week before in the run-up to the holiday. But hobbled by unseasonably warm weather that hurt sales of cold-weather apparel, department-store sales came in slightly beneath plan for the entire month, rising by 4.3%, shy of a targeted gain of 4.5%.

Ditto discounters, where sales for all of December came in light despite the sprint to the finish line. Sales in the final week of December rose by 2.0% at mass merchants, besting a 1.7% increase the prior week. But it still couldn't put the month on goal, with sales gaining by 1.6%, slightly beneath a target of 1.8% growth.

In a striking reversal of last year's shopping patterns, department stores significantly outperformed mass merchants during December 2006 as consumers shunned low prices in favor of step-up goods and a more service-oriented shopping environment. In 2005, discounters came out on top with a 3.8% increase, and department stores lagged with a 3.0% gain. But presumably feeling more flush this year, consumers returned to higher-priced outlets, and same-store sales at department stores rose almost three times as fast as at discounters, 4.5% vs. 1.8% for mass merchants.

That said, the same-store sales gain for December 2006 still lagged behind last year's results. For the entire month, same-store sales rose by 2.8% in 2006, well behind the 3.4% increase put up a year ago.

Johnson Redbook Index
Fifth week of December, year-over-year % change