Holiday surprises help Sears and Tiffany

By Brad Dorfman

CHICAGO (BestGrowthStock) – The holiday shopping season still delivered a few surprises on Tuesday, both naughty and nice, showing that the U.S. economic recovery is not strong enough to lift all retailers.

Talbots Inc (TLB.N: ) said its loss in its fiscal fourth quarter would be deeper than its previous worst-case forecast, as it had to slash prices in the last two weeks of December into January because women were avoiding its clothes.

Sears Holdings Corp (SHLD.O: ), meanwhile, forecast a fourth-quarter profit (Read more your timing to make a profit.) above Wall Street expectations, as sales of toys, home and sporting goods helped limit declines in overall comparable store sales fueled by weakness in appliances and clothing.

High-end jewelers fared better, with Tiffany & Co (TIF.N: ) saying sales rose 11 percent in November and December and raising its full-year forecast. Signet (SIG.N: ) saw strength at its higher-end Jared chain. (ID:N11112592: )

Tiffany and Signet shares were down slightly, while Sears’ shares were up more than 9 percent. Talbots plunged 17 percent, while the Standard & Poor’s retail index was up 0.3 percent.

The sales results and forecasts were the latest evidence that only some retailers are positioned to grow in an economy that is struggling to create jobs. Consumer spending accounts for about 70 percent of the U.S. economy.

“Compelling products sold,” Wall Street Strategies analyst Brian Sozzi said, noting that Tiffany had some interesting items in stock during the holidays.

But “Talbots is selling, at this point, commodity women’s clothes,” Sozzi said.


Last week, retailers posted December sales that fell short of analyst expectations that had risen after a strong start to the holiday shopping season. Still, sales at stores open at least one year saw their best performance since the start of the recession.

Many analysts also expect consumers to now stop spending and save up again to shop in the spring. U.S. chain store sales fell 3.2 percent in the weekend that ended January 8, compared with an increase of 0.4 percent in the prior week, according to the International Council of Shopping Centers and Goldman Sachs.

On Tuesday, Talbots said sales at stores open at least a year were down 6 percent so far in the fourth quarter, which ends on January 29. The retailer now expects a fourth-quarter adjusted loss per share from continuing operations of 15 cents to 19 cents, compared with its previous forecast of a range of a loss of 5 cents to a gain of 3 cents.

Sears, meanwhile, is still struggling against competition from mass merchants like Wal-Mart Stores Inc (WMT.N: ), especially in areas like electronics. Sales at Sears domestic stores open at least a year were down 6 percent in December, while comparable store sales at Kmart discount stores were up 2.3 percent.

But the company, which is led by hedge fund manager Edward Lampert, said it sees earnings of $3.39 to $4.12 a share for the fourth quarter, ending January 29. Analysts on an average were expecting earnings of $3.09 cents a share, according to Thomson Reuters I/B/E/S.

“I think Sears is more indicative of what they have done on expenses,” Sozzi said. “I just don’t think they are a market share gainer in this environment.”

Credit Suisse analyst Gary Balter said Sears’ profit will benefit from a lower-than-expected tax rate.

(Reporting by Brad Dorfman, editing by Dave Zimmerman)