December Retail Sales Post-Mortem

Following today's sudden realization that the much vaunted December retail sales data, which if one had listened to CNBC in December, would have been left with the "consensus view" that it would be one of the greatest shopping periods in the history of the world, was a dud, here is a complete post-mortem of the various individual retailers and how they fared versus expectations from Goldman's Greg "Chewbacca" Chwatko. 

December same-store sales were broadly in-line with consensus estimates, with several outliers. SSS standouts included Nordstrom and TJX, which beat consensus estimates by 5 pp and 4.5 pp, respectively. Nordstrom’s best categories were Dresses, Jewelry, and Women’s shoes, although geographically California stores remain pressured, with results below the full-line average. TJX saw sales improvements on top of its very strong 14% increase last December; the company raised its 4Q2010 EPS forecast to a range of $0.97 to $1.01, above its previous range of $0.89 to $0.94. The consensus estimate is $0.93. The company also raised its 4Q2010 same- store sales guidance to an increase of 2%, compared with prior guidance of a 1% to 3% decline. TJX highlighted its clean inventories going into the new year.

Gap and Target both missed estimates, with GPS missing by 5.6 pp and TGT missing by 3.1 pp. Gap reaffirmed its FY2010 EPS guidance, but noted weaker traffic in December, with the weakest results out of the Northeast. Target also reaffirmed its same-store sales growth expectations, and noted that while the Grocery and Apparel categories were strong, it saw weakness in its Electronics, Toys and select Home categories. These weaker categories are mostly bigger ticket and more seasonal products, illustrating a slightly more cautious consumer this holiday season. Target also saw some mix-shift into lower margin items.

Kohl’s raised the lower end of its EPS forecast to a range of $1.62 to $1.66 for 4Q2010, above its prior range of $1.58 to $1.66. The consensus estimate is $1.64. Management noted that transactions per store increased, although transaction values were lower. KSS’ strongest results were in the Southeast. Macy’s reiterated its expectations that 4Q2010 same-store sales will increase 3.5% to 4.5%, with EPS in the range of $1.44 to $1.49. The consensus estimate is $1.52. Management noted that results were strong despite the heavy snow in the Northeast.

J.C. Penney, Kohl’s, and Macy’s all called out strength in online sales during the month, with Kohl’s online sales up 66%. The strength in online was expected, owing to the snowstorms on the east coast keeping shoppers home on the day after Christmas.