Holiday shopping came in like a lion, but went out with a blizzard.
Retailers reported surprisingly weak December revenue on Thursday after a strong November pulled forward holiday spending and a blizzard in the Northeast took a bite out of sales after Christmas. Frugality seems to be making a comeback too, analysts said.
"The overall season was good, but the strength came from the beginning of the season," said Michael P. Niemira, chief economist at International Council of Shopping Centers. "This is kind of a wake-up call. It's back to reality. (December reports) show that consumers are pretty frugal, and sales are uneven."
Combining November and December, holiday revenue at stores open at least a year rose 3.8 percent over last year, according to an index compiled by the International Council of Shopping Centers. That's the biggest increase since 2006, when the same figure rose 4.4 percent.
But the index tailed off to a 3.1 percent increase in December after a 5.4 percent rise in November.
"The turbulence is here to stay," said David Bassuk, a managing director at consulting firm AlixPartners. "The consumer is still very sensitive to even slight fluctuations in prices -- the consumer is still looking for deals."
Now that Christmas is over, consumers, whose spending accounts for about 70 percent of the U.S. economy, are putting their wallets away.
"I want money in my bank account and my 401k back to where it used to be," said Patricia Welcoy, a legal assistant shopping on Wednesday in Manhattan and toting a T.J. Maxx bag.
As merchants reported their figures Thursday, many retailers including Target Corp., Costco Wholesale Corp. and Macy's Inc. reported gains below Wall Street expectations. Bon-Ton Stores Inc.'s sales were virtually flat and company officials blamed the severe snowstorms.
Among the winners was Abercrombie & Fitch Co., which saw robust gains that beat Wall Street estimates.
The figures are based on revenue at stores opened at least a year and are considered a key indicator of a retailer's health.
The disappointing December figures were surprising given earlier data from MasterCard Advisors' SpendingPulse and anecdotal evidence that pointed to a strong December.
The holiday 2010 had very few nail-biting moments — aggressive discounting on holiday goods as early as late October brought in consumers, giving stores better-than-expected sales for November. Based on reports from malls, shoppers bought more than expected and threw in more items for themselves.
Strong online sales, which some retailers don't include in their monthly figures, brightened the spending picture as well. Americans spent 13 percent more online this holiday season, ringing up a record $30.81 billion in online sales, according to comScore, an Internet research firm.
Still, December figures that disappointed investors underscore the challenges retailers face in getting shoppers back in the malls in the coming months when there's no reason to buy.
Among the retailers who disappointed investors was Target Corp. Its 0.9 percent increase in revenue at stores open at least a year fell well short of analysts' 4 percent estimate. Its shares fell $ 3.81, or 6.5 percent, to $55.13.
Sales for key gift categories were pulled forward into November, Target Chairman and CEO Gregg Steinhafel said in a statement, and merchandise with lower profit margins made up a higher portion of sales than expected.
Gap Inc. suffered a surprise 3 percent drop in December. Analysts had expected a 2.6 percent increase.
Among department stores, Macy's revenue at stores opened at least a year rose 3.9 percent, below the 4.5 percent estimate. But the combined November and December figure rose 4.6 percent. The company is sticking to its profit outlook for the fourth quarter.
J.C. Penney Co. posted a 3.7 percent increase, helped by strong sales of fine jewelry and women's accessories. Analysts had expected a 3.3 percent gain. Bon-Ton said its revenue at stores opened at least a year rose 0.1 percent. The company said that the Northeast blizzard shaved off between 1.5 and 2 percentage points.
"After a strong start to the holiday season in November, sales and traffic trends for our brands were less consistent in December," Sabrina Simmons, chief financial officer of Gap, said in a statement.
