Discount chains emerge as holiday winners as apparel suffers

NEW YORK – Discount chains such as Wal-Mart Stores Inc. and Costco Wholesale Corp. look like the winners from the holiday season.

In the first 27 days of December, discounters were on pace to post their best monthly sales gain in more than two years, according to figures collected by payment-technology firm First Data. Revenue rose 8.3 percent, which would be the biggest increase since August 2012. The gains were primarily driven by shoppers making more store visits than before.

The results suggest that Americans are staying frugal more than five years after the end of the last recession. They’re also spending a smaller portion of their budgets on clothing. Men’s and women’s apparel chains, shoe retailers and department stores all posted sales declines last month.

“The winners for December were clearly discount stores and wholesale clubs,” said Chen Grazutis, a retail analyst for Bloomberg Intelligence.

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One discount chain, Target Corp., enjoyed a rebound following a data breach in 2013’s holiday season, he said. Target and other mass merchants also benefited from sluggish sales at department stores, Grazutis said.

Consumers have diverted more of their discretionary spending toward monthly costs such as mobile-phone bills, hurting clothing sales, said Craig Johnson, president of Customer Growth Partners LLC, a New Canaan, Conn.-based consulting firm.

Clothing spending

In 2000, spending on clothing accounted for 5 percent of a typical U.S. household’s budget, Johnson said. It’s now about 2.8 percent, he said.

Retail as a whole rose 2.5 percent through Dec. 27 after a 2.2 percent gain in November, according to First Data, which collects information from purchases made in stores and online.

Grocery stores such as Kroger Co. and Safeway Inc. also posted robust sales as a group, with a gain of 6.2 percent last month.

Even though sales in the department-store category fell in November and December, there may be reasons for optimism. Revenue for such retailers probably improved in the second half of the month, according to Bloomberg Intelligence, which cited First Data research. J.C. Penney Co. backed that up yesterday, saying same-store sales rose 3.7 percent in the nine-week holiday season.

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