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Mass retailers regain some traction in ’11

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NEW YORK — While December sales were hurt by high temperatures, mass retailers still performed better last year than in 2010.

While December sales were hurt by high temperatures, mass retailers still performed better last year than in 2010.

Drug chains’ same-store sales for 2011 rose 3.5%, almost a full point higher than the year before, according to Racher Press research. Supermarkets’ full-year same-store sales advanced 1.6% compared to 1.3% in 2010, and discounters’ same-store volume was up 3.6%, 0.2 points better than in the prior year.

Last month the unusually balmy weather in several parts of the country deterred shoppers from buying winter goods, as did continued uncertainty over the economy.

"The holiday results reflect trends we can continue to expect into the new year," said Kantar Retail senior economist Frank Badillo. "We’re seeing weak-to-modest growth overall that hides pockets of strength skewed toward upscale retailers and value-focused retailers that win over shoppers at the expense of their competitors."

Among the chains posting less-than-scintillating December results was Target Corp., where a 1.6% gain in comparable-store sales missed management’s expectations and fell far short of the 3.1% increase predicted by analysts.

Disappointing sales of electronics and media diluted stronger results in grocery and beauty care, said chairman, president and chief executive officer Gregg Steinhafel. "Sales and traffic were strongest in the week leading up to Christmas as guests waited to shop for last-minute gifts," he said. "In 2012 we’ll continue to pursue initiatives designed to deliver compelling value and a superior shopping experience against the backdrop of continued slow and volatile economic growth."

The poor performance prompted Target management to lower its fourth quarter earnings guidance to $1.35 to $1.43 per diluted share from $1.43 to $1.53. Analysts had been expecting $1.48 per share.

Results at Costco Wholesale Corp. were better, but still missed Wall Street’s estimate. Total same-store sales rose 7%, with international warehouses leading the way with a 9% increase while domestic units generated a 7% gain. Excluding the positive impact of gasoline sales and the slightly negative effect of currency exchange rates, domestic comparable-store sales improved 6%, while those at international locations rose 11%. Results were driven by a 5% increase in customer traffic and a 2% rise in average transaction, although excluding fuel and currency the growth in average ring was 1.5%.

Among regional discount chains, Fred’s Inc. saw same-store sales edge down 0.4%. Bruce Efird, CEO of the Memphis-based chain, blamed the unseasonable weather. "Sales in areas such as heaters, soft lines, automotive and health care products reduced overall comparable-store sales by more than 200 basis points as our customers typically purchase these products as needed," he commented. "We expect a recovery in these product sales as colder weather returns over the next few months. December sales remained strong in several areas, most notably in pet, household supplies and pharmacy."

Same-store sales excluding fuel at Duckwall-ALCO Stores Inc. dipped 0.3%. "The warm weather had a particularly negative impact on cold-weather apparel, but also negatively impacted seasonal products in domestics, automotive and hardware," said president and CEO Rich Wilson.


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