A flurry of post-Christmas bargain shopping helped drive sales higher in the last week of December, according to a report Wednesday from a shopping mall trade group. Increased gift card use, mild weather and a federal holiday on Monday all contributed.
Sales at stores open at least one year rose 5.3 percent during the week ended Saturday compared with the same period a year ago. That report comes from the International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index, which estimates sales for 24 major stores like Target Corp. and Costco Wholesale Corp.
Revenue at stores open at least a year rose 1.2 percent for the week ended Saturday compared with the previous week, according to the index.
The metric is considered a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
As a result of the latest surge, the group increased its December sales growth estimate to a range of 4 percent to 4.5 percent. Previously the council expected December sales to rise by 3.5 percent to 4 percent.
Major retailers are set to release their final figures for the month on Thursday, but the big concern is how aggressive discounting and other incentives like earlier store openings and free shipping affected merchants' profits. Stores are expected to offer comments regarding their outlook for fourth-quarter results, which will be released next month.
For the official start of the holiday shopping season, stores opened as early as Thanksgiving Day, plying shoppers with discounts, resulting in record sales. But shoppers took a longer-than-usual break after that, and some stores had to step up discounting beyond what was planned in the final days before Christmas to attract shoppers, according to David Bassuk, managing director of retail at the consulting firm AlixPartners. Post-Christmas bargains were even better. Express stores, for example, promoted an "End of Season" sale, with merchandise prices reduced by up to 70 percent.
"The concern going into the season was that the profitability wouldn't be as high as a year ago," said Mike Niemira, chief economist at the International Council of Shopping Centers. "I suspect adjustments will have to be made." That could range from closing stores in unprofitable locations to changing marketing strategy.
For the November and December period combined, revenue at stores open at least a year is now expected to rise by 3.8 percent, up from the original 3.5 percent, says Niemira.
The ICSC expects total retail sales for the combined November and December period to rise 3.8 percent, up from an earlier forecast for 3.0 percent growth. Total retail sales exclude data from gas, automotive dealers, gas stations and restaurants and conform to data in the government retail sales report. The Commerce Department releases December sales data on Jan. 12.