Bargain-hunting after the holidays helped prop up sales at the nation's chain stores in December, but retailers' gains for the entire month were still disappointing.
Had it not been for strong after-Christmas sales, the month would have been dismal for most retailers, who reported sales yesterday.
"There was more traffic in stores the Monday and Tuesday after Christmas than in the two or three days before," said Kimberly K. Walin, who follows retailing stocks for Lehman Bros.
The gains that were made, moreover, came at the expense of profits.
"The customer is waiting until the last minute to get the best values, and we really saw it in our margins, which were puny," said Marvin P. Rich, executive vice president for strategic planning, finance and administration at Kmart Corp.
Kmart, which is in an intense battle for market share with Wal-Mart and Target, said its same-store sales increased 3 percent in December, compared with December 1993.
Analysts consider same-store sales, those in stores open at least one year, a better gauge of retail performance than total sales increases, which can reflect the opening of new stores.
Other retailers' gains in same-store sales, also known as comparable-store sales, were more robust, but many companies cautioned Wall Street analysts to reduce their expectations for fourth-quarter earnings.
Even Wal-Mart Stores Inc., whose discount stores posted a hefty 9.7 percent increase in comparable-store sales last month, told analysts that its gains were primarily from sales of low-margin goods such as electronics and housewares and from marked-down apparel.
"To a great extent, the numbers we're seeing are artificial in that sales look fairly good but retailers got hurt on the profit margin," said Jeffrey M. Feiner, a retail analyst at Salomon Bros.
The weak tone of business during the holidays is likely to increase the cautiousness of retailers this year, analysts said. Inventories will probably be kept lean, and companies will search for ways to cut costs.
Sears, Roebuck & Co. was the exception in the holiday season, analysts said. Its same-store sales jumped 7.9 percent, on top of a 13.3 percent increase in December 1993 from December 1992, and the company did not sacrifice profits in the process, analysts said.
The Goldman Sachs Retail Composite Comparable-Store Sales
Index, a weighted average of the monthly same-store sales of 52 national retail companies, rose 4.5 percent in December from 1993.
"If you look at this Christmas season, although it was consistent with what's been going on in the business in the last few months, it was slower than what people expected," said Richard N. Baum, a retail analyst at Goldman, Sachs.
Merchandise related to the home, such as appliances, computers and decorating items, sold much better than clothing, a pattern than has prevailed for almost two years.
Despite that trend, Hechinger Co. reported disappointing results. The Landover-based home improvement chain recorded a 2 percent drop in sales at stores that have been open for at least a year.
The Limited Inc. could hardly give its clothing away, and its same-store sales dropped 4 percent. Gap Inc., another apparel retailer, said its same-store sales were flat, as did the TJX Cos., which operates off-price stores.
Among the weakest performers among clothing retailers was Joppa-based Merry-Go-Round Enterprises, which is struggling to emerge from bankruptcy. The chain's same-store sales plunged 11 percent.
While big national discount-store chains fared well, regional discounters had a tougher time last month.