US store chains had to offer deep discounts to entice shoppers over the holiday selling season, cutting into profits even as overall December sales came in slightly above expectations.
JC Penney yesterday cut its quarterly profit forecast, citing “higher markdown activity”, and its shares fell 2.7 per cent. Kohl’s also cut its holiday-quarter profit outlook after a disappointing December and a disastrous sales decline in November.
Privately-owned Toys R Us also said sales fell over the key holiday period. The world’s biggest toys specialist, which is looking to go public this year, reported a 1.2 per cent rise in December sales at established US stores, but total sales dropped.
Turnover at Target and Costco rose over Christmas, but missed forecasts, and Gap’s same-store takings fell four per cent.
But Macy’s, which expanded its late-night hours to more stores in the final days before Christmas and carried more exclusive goods, reported a better-than-expected 6.2 per cent rise in December sales and raised its outlook for the quarter.
“The consumer is in the driver's seat -- they have the power,” said David Bassuk, head of AlixPartners retail practice. “We’ll still see aggressive promotions in the next six months.”