By Jessica Wohl
(Reuters) - Several major U.S. retailers beat expectations of modest sales increases in December as shoppers wrapped up holiday buying, but overall results were mixed and only stores that were nimble enough thrived in an uncertain economy.
Costco Wholesale Corp
Across 17 retailers including discounters, department stores and apparel chains, December sales at stores open at least a year rose 4.5 percent, topping analysts' estimates for 3.3 percent growth. The result reported Thursday also topped 1.6 percent growth in November 2012 and a 4.2 percent increase in December 2011, according to Thomson Reuters I/B/E/S.
Companies like Costco, TJX and Ross "are able to thrive in whatever economic environment they happen to be operating in" by adjusting their business models, inventory levels and sales strategies better than many peers, said Craig Johnson, president of Customer Growth Partners.
The stronger-than-expected December is likely to help retailers overcome a softer start to the key holiday season. The 2012 season was never expected to be stellar, but even the single-digit growth anticipated by chains and analysts came under pressure as Superstorm Sandy, the ever-present headlines about the "fiscal cliff" and the Connecticut school shootings affected consumers' moods in November and December.
With the number of chains that report monthly sales dwindling in recent years, Thursday's tally offered a limited snapshot of consumer behavior. Industry heavyweights like Wal-Mart Stores Inc
Retail stocks, which largely missed out on Wednesday's market rally, rose on Thursday. The S&P 500 retail index <.SPXRT> added nearly 1 percent near midday, while the S&P 500 index <.SPX> inched up 0.1 percent.
With the country moving past the fiscal cliff debate, retailers will be watching whether the expiration of the payroll tax cut takes a toll on consumer spending.
The expiration of the payroll tax holiday, which this week raises Social Security taxes for workers to 6.2 percent from 4.2 percent, may be more important to the economy than the income tax hike for wealthy people, said Michael Wilson, head of research at Morgan Stanley's wealth management division.
"A two percent hit off the top for the average person is meaningful," he said. "It will change their spending behavior."
While it was hard to say American consumers were tapped out, they are "fragile," said Chris Donnelly, global head of Accenture's retail practice. "It doesn't take much to rattle the consumer."
As cautious U.S. consumers try to stick to their budgets, it remains a very competitive marketplace for retailers, Donnelly said.
Madison Riley, managing director of retail consulting firm Kurt Salmon, predicted that if the upcoming debt ceiling debate goes better than the Washington wrangling to avoid the cliff, there could be a bigger uptick in consumer spending in 2013.
As retailers finish up their quarter this month, they are bringing out fresh merchandise while offering deep discounts to move winter goods.
Michael Niemira, chief economist of the International Council of Shopping Centers, sees a ho-hum spring selling season. He expects sales growth in the 2013 spring season to be weaker than in 2012.
Higher food prices this year mean "a little less discretionary spending power" for U.S. shoppers, he said.
One bright spot this spring could be home goods. Home improvement chains such as Home Depot Inc
HITS AND MISSES
TJX and Ross, which appeal to bargain hunters with marked-down name-brand merchandise, posted stronger-than-expected sales and raised their fourth-quarter earnings forecasts.
But at Barnes & Noble Inc
Target's same-store sales were essentially flat, while analysts anticipated a 0.8 percent increase. Target said fourth-quarter earnings should meet or somewhat exceed the low end of its forecast, but the warning was not as dire as some may have anticipated, and its shares were up 2.3 percent.
Limited Brands Inc
Wet Seal Inc
Family Dollar's same-store sales rose about 2.5 percent in December after increasing 6.6 percent in the preceding quarter. Its shares slid 11 percent.
"The holiday selling season proved to be more challenging than we expected as customers faced increasing financial uncertainty," said Family Dollar Chairman and CEO Howard Levine.
(Reporting by Jessica Wohl in Chicago; Additional reporting by Dhanya Skariachan, Phil Wahba and Jed Horowitz in New York and by reporters in Bangalore; Editing by Jeffrey Benkoe)