NEW YORK (AP) — A last-minute surge in spending seems to have saved the holiday shopping season for stores.
Major retailers including Costco, Gap and Nordstrom on Thursday reported better-than-expected revenue in December. That comes as a relief for stores that can make up to 40 percent of their annual revenue during the winter holiday shopping period that runs from November through the end of December.
Americans initially spent cautiously during the holiday season because of the damage after Superstorm Sandy. Then they were consumed by fears about the possibility of the U.S. economy falling off the "fiscal cliff," triggering massive budget cuts and tax increases that would mean much less money in their pockets. But they loosened their purse strings in the final shopping days of the year.
Twenty retailers reported that revenue at stores open at least a year — a figure that indicates a retailers' health — rose an average of 4.5 percent in December compared with the year-ago period, according to the International Council of Shopping Centers. That's on the high end of the expected range of 4 percent to 4.5 percent. Only a small group of stores representing about 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue, but the data offers a snapshot of consumer spending.
"I wouldn't be doing cartwheels that it was a particularly great or strong holiday season, but it could have been worse given the headwinds," said Ken Perkins, president of RetailMetrics, a research firm. "The government and Mother Nature were not as cooperative as retailers would have liked. But it was definitely not as bad as feared."
December's results provide a brighter picture than reports earlier in the month that proclaimed that the holiday shopping season was shaping up to be the worst since 2008 when the U.S. was in a deep recession.
To be sure, the season had multiple fits and starts, with healthy spending during certain periods followed by stretches of tepid sales. Overall, revenue for the combined months of November and December rose 3.1 percent, slightly above of the 3 percent rise the ICSC had predicted.
Sales were weak at the beginning of November in the wake of Superstorm Sandy on the Northeast and the U.S. presidential campaign. Then, there was a surge during the four-day Thanksgiving weekend. Spending fell off after that until a shopping rush around right before and after Christmas when some stores began offering bigger discounts.
Nordstrom, for instance, had a particularly strong December, with revenue at stores open at least a year up 8.6 percent, more than double the 3.4 percent analysts expected. The Seattle-based department store operator said sales were particularly strong in the last week of the season, as shoppers got a full weekend before Christmas, which fell on a Tuesday.
"That last-minute shopping, coupled with post-Christmas bargain hunting and early gift-card redemption helped propel sales at the end of the month," said Michael P. Niemira, ICSC's chief economist.
Kelly Tenedini, 35, had finished her Christmas shopping the week before Christmas, but decided to pick up some "filler" gifts for her mom and her sister on the Sunday before Christmas at the Target in the Edgewood Retail District in Atlanta. Tenedini bought a sweater for her mom and gloves that work with iPhones for her mother and sister. Tenedini, who works in marketing, said the biggest deal she found was online: $50 off a pot and pan set for herself on Target.com.
Manuel Gonzalez, 52, from Manhattan borough of New York City, spent about $150 on the Saturday before Christmas when he went to The Garden State Plaza in Paramus, N.J. He scooped up bargains, including 75 percent discount on Sketcher sneakers at Macy's.
For the season, he was budgeting about $400 to $500 for overall holiday shopping for his three boys, ages 5, 8 and 22 -- the same amount he spent a year ago.
"You have to buy a little at a time. I am budgeting," said Gonzales, who works at a bank and was glad he waited.
While the last-minute promotions may have drawn shoppers, they also ate into stores' profits.
For instance, Kohl's said its December revenue at stores open at least a year increased 3.4 percent, beating Wall Street predictions. But the retailer added that the growth came from heavy discounts, particularly unplanned ones late in the holiday season, and it cut its profit outlook for the current quarter and full year.
"Sales came late in the holiday shopping season and, as a result, were at deeper discounts than planned," said CEO Kevin Mansell. "We are taking the necessary markdowns in the fourth quarter to manage our inventory as we transition into the Spring season."
AP Writer Anne D'Innocenzio in New York contributed to this report.