Retailers that stuck with their same old holiday season strategies were dealt a blow in November, while earlier hours and bigger promotions were the keys to success for other chains.
Overall, November sales at stores open at least a year rose as they were expected, although there were clear winners and losers during a critical month for the retail industry.
Retailers rolled out midnight door-buster sales after Thanksgiving, free shipping for online orders and other special deals to entice those shoppers who may have been reluctant in the face of economic pressure.
Such tactics paid off for chains such as Macy's Inc and Saks Inc. Meanwhile, Kohl's Corp and J.C. Penney Co Inc were among the few that flopped.
It's definitely a mixed bag, said Matt Arnold, a consumer analyst at Edward Jones in St. Louis. It almost seems like the chains that were catering to a higher-income consumer seemed to be more the winners and more discount-oriented chains, in many instances, got off to a weaker start.
Kohl's 6.2 percent drop in same-store sales was the steepest decline among retailers and missed analysts' expectations by the widest margin. Its shares fell 6 percent.
Penney said its decision to open at 4 a.m. on Black Friday, rather than opening at midnight as Macy's, Kohl's and others did, hurt its performance on that day and sales in its stores remained soft throughout the holiday weekend. However, traffic on its website was strong over the weekend, but those sales will not be reported until the company's December tally.
The 20 chains that had reported monthly same-store sales as of Thursday morning posted an average increase of 3.1 percent, according to Thomson Reuters. In November 2010, such sales jumped 5.5 percent.
The tally provides just a glimpse into total spending, as major chains that do brisk holiday business, such as Wal-Mart Stores Inc and Best Buy Co Inc, do not issue monthly reports.
Retailers now must do what they can to see profitable gains for the rest of the holiday season -- a difficult task as many industry watchers expect that shoppers under financial stress will hold back after their weekend binge.
Clearly, retailers bent over backwards to juice sales up for the holiday weekend, said Kurt Salmon retail strategist John Long.
He plans to closely watch traffic at stores this weekend to see if Black Friday was a sustainable trend for the season or just an anomaly.
Macy's shares rose to their highest level since October 2007 after the chain said quarterly same-store sales could surpass its expectations if November's trends continue.
Meanwhile, weaker-than-expected same-store sales at Target Corp and Gap Inc showed that shoppers remained selective.
The consumer has become insanely focused on promotions, said David Bassuk, head of the global retail practice at AlixPartners. The consumer is willing to spend money, that's the good news. But consumers needs to be convinced.
Gap's discounts were not as aggressive as analysts said they wanted to see.
This is just the start of the holiday selling season and we expect December to remain fiercely competitive and highly promotional, said Glenn Murphy, chairman and chief executive officer of Gap.
Over at Target, people who bought did spend more, but fewer came out to make purchases. Toys, music and movies were among the worst performing categories, it said. Target said it expects a competitive and promotional environment to persist in December with the main focus still on value.
Women's clothing retailer Talbots Inc also expects a challenging and promotional holiday season. Its shares tumbled after it posted a deeper-than-anticipated quarterly loss.
Total retail sales for the weekend reached an estimated $52.4 billion, up from $45 billion last year, according to the National Retail Federation, which expects full holiday season sales to rise 2.8 percent.
Michael Niemira, chief economist of the International Council of Shopping Centers, said a same-store sales gain of 3.2 percent in November came in slightly below his expectations of 3.5 percent to 4 percent. The ICSC expects December will be stronger, with same-store sales up 3.5 percent to 4 percent.
Analysts cautioned that investors need to look at the full holiday season, not just Black Friday weekend.
Until the entire holiday season is over there is really no verdict that you can render, said Edward Jones' Arnold.
(Reporting by Jessica Wohl and Brad Dorfman in Chicago, Phil Wahba and Dhanya Skariachan in New York and Nivedita Bhattacharjee in Bangalore; Editing by Maureen Bavdek)