December Retail Sales Missed Estimates

Source: Bloomberg By Leslie Patton and Matt Townsend

Sales at Gap Inc., Target Corp. and other U.S. retailers fell short of analysts’ projections last month as more people shopped early for the holidays and bad weather kept them from stores afterward.

Sales at stores open more than a year rose 3.2 percent in December, according to Retail Metrics Inc. That compared with the 3.5 percent average of estimates compiled by the firm and a 5.5 percent increase in November. Gap, based in San Francisco, and Target each fell more than 6 percent.

A Dec. 26 blizzard that dumped more than a foot of snow on parts of the U.S. Northeast “disrupted” post-holiday shopping, said Macy’s Inc. Chief Executive Officer Terry Lundgren, whose department-store chain’s results also missed predictions. That may have pushed some sales into January, according to Customer Growth Partners’ Craig Johnson.

“Snowstorms do not destroy demand, they simply displace demand,” said Johnson, president of the New Canaan, Connecticut-based retail consulting firm. “Those gift cards don’t disappear, they get redeemed in January.”

Target, the second-largest U.S. discount chain, posted a gain of 0.9 percent, below the 3.9 percent average increase indicated by estimates compiled by Retail Metrics. Sales at stores open more than a year at Gap, the largest U.S. apparel retailer, fell 3 percent, compared with the 2.4 percent average increase projection.

Strong November Start

“After a strong start to the holiday season in November, sales and traffic trends for our brands were less consistent in December,” Gap finance chief Sabrina Simmons said in a statement today.

Some retailers get as much as 40 percent of revenue from the holiday period, which includes the day after U.S. Thanksgiving, one of the biggest shopping days of the year.

The Standard & Poor’s 500 Retailing Index sank 1 percent to 503.98, led by Gap and Target, at 10:07 a.m. New York time. Gap fell $1.60 to $20.63 in New York Stock Exchange composite trading. Minneapolis-based Target slumped $3.79 to $55.15, the most in almost two years.

Teen retailer Abercrombie & Fitch Co. stood out with a sales increase of 15 percent, surpassing the average estimate of 10 percent. Competitors American Eagle Outfitters Inc. and Aeropostale Inc. both fell below projections.

Most chains count locations open at least a year to tabulate same-store sales. This kind of revenue is a key indicator of a retailer’s growth because new and closed sites are excluded.