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Holiday Retail Sales Beat Dec. Targets, But Results Mixed

Retailers ended the holiday season with better-than-expected December sales. But Thursday's reports were mixed, with a few high- and low-end chains leading while midtier stores struggled.

Sales at stores open at least a year rose 4.8% vs. a year ago, says Ken Perkins, president of Retail Metrics. Analysts forecast a 3.4% gain excluding drugstores.

Just 53% of chains beat forecasts, though Nordstrom (JWN), Costco Wholesale (COST) and TJX Cos. (TJX) were standouts.

December sales defied head winds, from lingering Superstorm Sandy fallout to consumer worries over the fiscal cliff. Analysts had slashed forecasts on several retailers in the past week.

"But it looks like there was a really strong pre-Christmas and post-Christmas surge for a number of retailers," Perkins said.

November-December comps rose 2.9% from a year earlier, slightly below last year's 3.3% rise and 2010's 4%, says Perkins.

November sales were weak, Perkins adds, leading some companies that did well in December to guide fourth-quarter earnings forecasts lower.

"There was margin pressure, which resulted from markdowns at the end of the month, which potentially lead to weaker fourth-quarter earnings," he said.

Costco same-store sales rose 9% vs. a year earlier, well above forecasts for a 6.1% gain.

High-end department store operator Nordstrom was also a big winner, with comps up 8.6%, sailing past views for 3.6%.

Off-price apparel chains also fared well. Ross Stores (ROST) and TJX enjoyed 6% same-store sales gains, both at least double what analysts expected.

Gap (GPS) comps rose 5%, beating estimates for a 3.6% increase. It also will buy upscale women's apparel boutique operator Intermix for $130 million.

Department store giant Macy's (NYSE:M) comps grew 4.1%, slightly above forecasts.

Kohl's (KSS) same-store sales rose 3.4%, significantly above targets. But the value department store cut its Q4 earnings guidance.

Big discounter Target (TGT) had flat comps vs. a 1.3% gain forecast.

Limited Brands (LTD) comps grew 3%, below views for 4.7%. It was a rare miss for the parent of Victoria's Secret. Its shares dived 6%.

Family Dollar (FDO) dived 13 % after the specialty discounter missed profit forecasts and guided low.

But Nordstrom and TJX rose 3% and Ross 8%. Costco was up just 1%, but did hit a record high.

Meanwhile, GM (GM) and Ford (NYSE:F) hit 52-week highs after reporting solid December U.S. sales. Auto dealer stocks also rallied.

Michael Niemira, chief economist at the International Council of Shopping Centers, expects January comps to rise 3% vs. a year ago. He sees a similar sales pace for the next fiscal year.

Higher food prices and the end of the payroll tax holiday will cut into consumers' ability to spend.

"The slower sales trends are here to stay," he said.