Luxury shoppers helped lift December comparable-store sales, but analysts, already coming down from their holiday highs, questioned if consumers could keep up the pace as economic headwinds accelerate.

This story first appeared in the January 5, 2011 issue of WWD. Subscribe Today.

Despite winter blizzards and fears that shoppers would play Scrooge this Christmas, December comps proved robust and are likely to rise between 3.4 percent and 3.6 percent when retailers report results on Thursday.

“I’m reluctant to say that things are back,” said Mike Berry, director of industry research for MasterCard Advisors SpendingPulse.

According to SpendingPulse — which estimates total U.S. retail sales made by cash, check or credit card — total apparel sales rose 10.9 percent in December over a 2.3 percent increase last year. Women’s apparel grew 6.1 percent, which was its best performance of 2010, as men’s apparel rose 9.9 percent. Family and children’s apparel jumped 12.4 percent and 11.3 percent, respectively.

Luxury sales expanded 8.5 percent, the biggest increase for the sector since last spring. Footwear sales increased 10.8 percent while jewelry sales rose 10.4 percent, bolstered by a 15.6 percent leap in sales at independent jewelers. The big loser in December was the department store segment, which brought in a negative 1.4 percent comp. Thomson Reuters’ consensus estimate is that the department stores reporting comps on Thursday will have a median increase of 3.8 percent.

Over the past few months, the sector has flirted with flat to slightly negative comps, which is due partially to some low-end chains pulling down the average.

Berry, who called the department store sector a “mixed bag,” said the “higher-end stores” and “mainline” chains are keeping the numbers from falling further.

Nonetheless, Berry said he sees a “rising tide” and a stronger “momentum” going into 2011 than he did at the same time last year.

However, he noted that standout categories jewelry and luxury still were down 4.2 percent and 1.2 percent, respectively, from December 2007 levels.

“A year ago, it was socially taboo to shop, as we were going through the recession. We’ve seen an easing of that,” said Weeden & Co. analyst Amy Noblin, who noted that “a lot of spending is disproportionately better at the higher end,” creating “further bifurcation” among consumers with different income levels.

Michael Dart, head of private equity at Kurt Salmon, noted that even though the luxury market has rebounded nicely, high-end consumers’ habits have changed due to the recession. They now pay more attention to price and value, and they purchase items more conservatively.

One need look no further than aspirational consumers, said Dart, explaining these shoppers, who had “buoyed” the luxury sector before the downturn, have traded down and now only occasionally purchase “accessories or bridge basics” at their favorite luxury stores.

Meanwhile, lower-income consumers — plagued by high unemployment, tight credit and a difficult housing market — will battle rising apparel prices as commodity prices climb this year. This could create a nasty tug-of-war for market share among midtier retailers and value-priced chains, according to Dart, who said December’s acceleration in spending probably won’t carry into 2011.

“Holiday exceeded expectations. However, I think the consumer had been bottled up in terms of spending,” he said, explaining that with income growing at just 2 to 3 percent, the only way for consumers to spend more is if they “take on more debt.”

With credit markets already stretched and gasoline prices moving up, the more likely situation is that consumers will seek out retailers offering unique fashion at a palatable price.

“To me, it’s going to be a retailer’s retail year,” said Kurt Salmon managing director of retail strategies Arnold Aronson, who underscored that success would be found in business fundamentals such as product innovation, international expansion and a focus on customer experience. “It’s a dance. Those who are doing well now have a beat on what has to be done.”

On Wall Street Tuesday, retail stocks failed to sustain the strong momentum with which they began the year. The S&P Retail Index fell 6.39 points, or 1.2 percent, to 507.35 after hitting a new 52-week high of 516.48 in midday trading Monday. The Dow Jones Industrial Average eked out a gain of 20.43 points, or 0.2 percent, to 11,691.18, while the S&P 500 and Nasdaq Composite Index slid 0.1 percent and 0.4 percent, respectively, to 1,270.20 and 2,681.25.

Among the retail issues hit hardest by Tuesday’s pullback was Zumiez Inc., down $1.69, or 6.2 percent, to $25.45. Thomson Reuters estimated that the Everett, Wash.-based specialty chain, which specializes in action-sports apparel and gear, would post an 11.5 percent increase in December comps, the highest among companies for which projections were provided but substantially below the 20.7 percent gain logged in November and the 21.5 percent increase of October.

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