Discount Retailers Thriving in Recession

Four major discount department store chains are thriving despite (or perhaps because of) the recession. Kohl’s (NYSE: KSS), Kmart (NASDAQ: SHLD), Marshall’s (NYSE: TJX) and T.J. Maxx (NYSE: TJX) all showed gains in December 2008 sales per customer over both three month and twelve month periods.

Marshall’s had the strongest performance in the group over the past twelve months, gaining 45% in customer spend per month from $65.41 in December 2007 to $95.15 in December 2008. It gained 16% from $81.98 in the three month period from September 2008 to December 2008.

The strongest short term gainer was Kmart, which saw spending per customer increase 33% from $58.54 in September to $78.03 in December. It gained 15% from December 2007’s $67.63.

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Kohl’s registered an 11% gain as spending per customer grew from $86.69 the previous December and $86.35 in September to $95.94 in December 2008.

The relative laggard in the group was T.J. Maxx, which saw spending per customer increase 7% from September’s $70.33 to $75.30. It had been at $68.47 in December 2007 - a gain of 9%. This data was reported by Geezeo’s Main Street Spending Index (MSSI).

The strong performance of these chains was in direct contrast to weak sales for higher end department stores such as Macy’s (M) and Nordstrom (JWN).

Comments

[The Good Ne...:]

Geezeo,

Thanks for this piece of good news.

The value chain of retail is indeed being reshuffled in the midst of this downturn. Although that might not be good news for luxury retailers, it does mean the US consumer returns to thrift and value instead of overpriced junk.

Said another way, we spend our money more on the intrinsic nature of the product. We have something more for our buck.

And from a "green" perspective, why do I need a Walmart, a Target, a Kmart, a Penny's, and a Sears, all distributing the same product within a block of each other?

Amazon had it's best Christmas ever.

These discount winners should take note.

GNE

Jan 07 01:58 PM

[schnickelfritz:]

What the author conveniently omits from the equation is how did the margin grow in comparison with the sales increases?
With discounts ranging to 70% plus another 10% and/or $10 coupon promo, how bad would the economy have to get NOT to notice some uptick in sales?

Jan 10 10:05 AM