Stronger-than-anticipat- ed consumer spending drove December holiday sales above expectations for many of the nation's retailers, though shifts in shopping patterns led to clear winners and losers for the month.
Discounters, such as Wal-Mart Stores Inc., and specialty stores, such as AnnTaylor Stores Corp., posted even stronger gains than expected, while more moderately priced department store chains J. C. Penney Co. and Sears, Roebuck and Co. struggled, according to sales figures released yesterday by major retailers.
"There certainly were surprises on the upside here, and it goes across the board," said Rick Gallagher, vice president of the National Retail Federation and publisher of the trade journal Stores Magazine. "The biggest surprise was Wal-Mart. Everyone thought it would do well, and it did better than that."
Wal-Mart posted sales gains of 9.4 percent at stores open at least a year, rather than the approximately 5 percent increase the company had expected.
The crucial holiday season started off slowly, with a spring-like warm spell dampening sales of cold-weather apparel. Months before that, however, analysts had worried that faltering consumer confidence might hurt holiday sales.
But sales picked up the week before Christmas as merchants offered discounts of as much as 70 percent, and shoppers flocked to the stores for after-Christmas sales.
Retail sales reached $171 billion during the holiday season, an increase of 4.5 percent, said Tom Tashjian, senior managing director with NationsBanc Montgomery Securities in San Francisco. Retailers saw an increase in demand for music, consumer electronics, jewelry and home goods, all categories that performed especially well, Tashjian said.
According to the retail index of the Bank of Tokyo-Mitsubishi Ltd., which tracks 80 retailers, sales for the season, including both November and December, rose 5.1 percent.
"Consumers seem to have shrugged off some of the concerns that they had in July, August and September regarding the future of the economy, where the stock market is going, the Asian economic crisis, the political uncertainty," said Joseph Ronning, a retail analyst with Brown Brothers Harriman in New York.
"What you saw is the strong economy, good personal incomes, plus the fact that no one is saving anymore. Consumers went out there and were willing to spend when they perceived there was value."
For instance, he said, shoppers responded to deep discounts offered by many of the department store chains that found themselves with an abundance of inventory late in the season.
Department store chains, such as May Department Stores Co., Federated Department Stores Inc. and Saks Inc., also learned lessons from the 1997 holiday season -- that consumers shop late and look for bargains, Tashjian said. All three chains saw sales rise -- 4.4 percent for the May company, which runs Hecht's and Lord & Taylor; 5.7 percent for Federated, which runs Bloomingdale's and Macy's; and 3 percent for Saks.
But those results left retail experts wondering whether sales were made at the expense of profit.
Other department store chains struggled. After reporting sales declines of 7.6 percent yesterday, J. C. Penney forecast fourth-quarter earnings of 70 cents to 80 cents a share, well below Wall Street expectations of $1.06 a share.
Despite Sears' strong finish, in which cooler weather accelerated sales of seasonal apparel, snow blowers, tires and batteries, the chain saw its sales dip for the month by 0.3 percent.
"The big lesson we saw out of the holiday selling season was a shift in where people bought clothes," said Gallagher of the retail federation. "Moderately priced department stores had trouble maintaining market share, and at the same time, we saw apparel specialty stores become the single strongest segment. Specialty stores that have done well are ones that have defined their market and their customers very clearly."
Sales shot up 19 percent at Gap Inc., which operates Gap, Old Navy and Banana Republic stores. Sales rose 4 percent at the Limited Inc. and 15.9 percent at AnnTaylor.
J. Patrick Spainhour, chairman of AnnTaylor, said the stores' holiday collection, most notably sweaters and career wear, including holiday separates, led the business.
"Sales have been strong throughout the fall season, and this success continued in December," he said.
During the month, electronics retailers benefited from lower prices on newer products, such as digital cameras and DVD. Sales rose 11 percent at Circuit City, led by personal computers, satellite TV and digital video disc players.
At Toys `R' Us, however, same-store sales fell 7 percent in December, the company said.