Holiday sales: Investors grumpy; Retail Report.(Business)

Some days it's impossible to make Wall Street happy.

U.S. retailers said Thursday they had their best holiday season since 2006, according to the International Council of Shopping Centers, which said they clocked sales gains of 3.8 percent between Oct. 31 and Jan. 1.

Everyone from Costco to Nordstrom to Target reported sales gains for December.

But investors pouted mightily. They wanted more out of Christmas and sent the Standard & Poor's Retail Index down 1.5 percent. Target's shares plummeted almost 7 percent.

Locally, Costco's stock fell 34 cents to $70.65 because its 6 percent gain in December same-store sales -- a popular gauge for growth -- was three-tenths of a percentage point shy of analysts' expectations. It is still trading near its 52-week high of $73.45.

As investors threw their fit, Costco's South Seattle store was packed and cars lined up at its gas pumps like it was the 1970s oil crisis again.

Shopper Joe Burdett, of Seattle, also owns Costco shares and said the slight miss in December does not phase him. He said he worries more about all the recliners, headboards and wine cabinets that have replaced Christmas decorations on the warehouse floor.

"Everyone says the economy is turning around, but that's a lot of furniture to sell," Burdett said.

Many shoppers said they do not rely on Costco for holiday shopping, but lean on it for everyday groceries and sundries, and for party food.

Self-proclaimed "Costcoholic" Susan Michaels, of Seattle, visits about three times a month and likes how well stocked and organized Costco is. Waiting in a long return line, she said she also appreciates the return policy: "You never get the third-degree."

Upscale department-store chains appeared to be among the biggest winners of the holiday-shopping season.

Seattle-based Nordstrom was among the few retail stocks that rose, up 8 cents to $42.94 after posting an 8.4 percent increase in December sales, more than double Wall Street's projection for a 3.4 percent gain. That followed a 5.1 percent rise in same-store sales for November.

Nordstrom called out dresses, jewelry and women's shoes as top merchandise categories.

Meanwhile, December same-store sales increased 11.8 percent at Saks and 4.7 percent at Neiman Marcus.

The reason: Affluent customers shopped "later and more freely into the holiday" season, said Frank Badillo, senior economist with consulting firm Kantar Retail.

"The stock markets have bounced back. They feel better about their household wealth, and they're more secure about their job situation," Badillo said. "As we come out of this recession, we will see shoppers slowly return to some prerecession behavior. But it will happen to a different degree and at a different pace for different groups of shoppers."

Some analysts noted that the 2010 holiday season marked a return to prerecession spending levels for many categories. Online spending, as well as spending on groceries, auto parts and clothing, are now above the pre-recession peak, according to MasterCard Advisors' SpendingPulse, which tracks all transactions including cash.

Internet retailer Amazon.com, which does not release monthly sales figures, seemed likely to emerge another winner. The Seattle-based company said last week it sold more than 13.7 million items worldwide on its busiest day of the season, Nov. 29, representing a 44 percent increase from its best day the year before.

That's more information than investors will know about Starbucks, another Seattle retailer, until it reports quarterly earnings in late January. It stopped reporting monthly sales in 2008 to focus more on coffee, a word it said this week it is removing from its logo.

Still, a sampling of shoppers Thursday at Westfield Southcenter in Tukwila left little doubt that an uncertain economy continues to weigh heavily on people's minds.

Kerren Buchanan, of Seattle, bought a $115 pair of rain boots for herself at Southcenter's Nordstrom store.

"I've gone through three pairs of rain boots that cost probably a third of that," she reasoned. "I just said, 'Let me make an investment on a more expensive pair from Nordstrom, and I'll take them back if they don't work out.' "

Bellevue mom Liz Allen pushed a stroller through Southcenter with sister-in-law Zoe Allen, of Kent.

"There are tons of sales right now, but we just can't do it," said Liz Allen, who limited her spending to a portion of an H&M gift card she received as a Christmas present. "We budget for Christmas. We don't budget for more spending in January."

Zoe Allen said she plans to limit her purchases to needs rather than wants.

"I lost my job recently, and I just had a baby," said Zoe Allen, who previously worked for a local software company. Fortunately, her architect-husband still has his job.

"We're almost in foreclosure with our house, so we're looking to move," she said.

AP contributed to this report.

Tidbits

Seattle-based clothier Tommy Bahama will soon make its Manhattan debut. The company said Monday it signed a 12-year lease for an 8,509-square-foot store in the Fred French Building at Fifth Avenue and 45th Street. The store, tentatively set to open by the end of this year, will be spread across three levels including the ground floor. Founded in 1992, Tommy Bahama has 89 stores throughout the U.S. -- AM

The Red Balloon Company is leaving downtown Seattle after 20 years. The specialty-gift store at Seventh Avenue and Olive Way will close for good on Jan. 14. Owner John Gallant said a second, larger store on Capitol Hill will remain open.

"Our lease was up, so we had to make a decision if we were going to stay for another five years," Gallant said, noting that walk-in traffic to the downtown store fell after the recession began in late 2007, while sales have continued to grow at the Capitol Hill store and online.

"A lot of our business downtown came from office workers who were holding events in their offices, and companies have cut back," he said. -- AM

Retail Report appears Fridays. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or amartinez@seattletimes.com. Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or mallison@seattletimes.com.

CAPTION(S):

Erika Schultz / The Seattle Times: Shoppers say they're being careful on spending. (0414867294)

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