At the Luxury End, Holiday Sales Were Hopping - NYTimes.com

While the numbers released yesterday were better than last year's, they were less than the double-digit turnaround retailers had hoped for in September, before three major snowstorms hit the Northeast, and buyers told pollsters there was no must-have toy or item of clothing.

Expensive items -- cashmere and diamond watches -- filled hand-knit stockings. The sale of 18-karat gold watches, for example, rose 12 percent in the holiday season, through December; watches from $5,000 to $10,000 rose 16 percent, according to LGI Network, which tracks watch sales.

For the customer, that meant there were not as many bargain sales. J. Crew and Gap, for example, curtailed a lot of the post-Thanksgiving markdowns, as did Saks and Lord & Taylor, a unit of May Department Stores. J. Crew is a unit of the Texas Pacific Group. And while it seemed as if the electronics stores were cutting prices like crazy, Mr. Fassler, the analyst, said that the holiday's low prices were due more to price deflation than to discounting.

The scale tipped both ways: Kohl's, a few years ago the hottest retailing story in the country, fell far below its executives' estimates for December: instead of a mid-single- digit increase over last year, the moderate-priced department store chain fell 1.2 percent. Then there were the dark-horse stories: Ann Taylor, whose numbers had been dispiriting, climbed into the retailing stratosphere, with a 26.2 percent increase.

Quirky items, like a $25 candle called Fig, flew off the she *** es, helping the Bath and Body Works chain -- part of Limited Brands -- to a 16 percent increase over last December. But Victoria's Secret, also owned by Limited, did worse than expected: its pajamas and sexy push-up bras failed to attract enough shoppers, and sales fell 5 percent. Gap rose only 1 percent; Wal-Mart Stores rose 4.3 percent, but that figure included a hefty 6.1 percent increase at Sam's Club, Wal-Mart's discount warehouse. Yesterday, Wal-Mart announced that fourth-quarter profit would be at the low end of its estimated 63 to 65 cents a share.

''Expect some good gross margins in the fourth quarter,'' she said. ''We're predicting a nice swath of better-than-expected earnings reports.''

Over all, while store sales were up 12.6 percent at Neiman and its Bergdorf Goodman unit, sales rose 27 percent for Neiman's online and catalog sales.

More than in the last few years, the holiday season of 2003 showed a wide gap between winners and losers. In the end, even the electronic stores selling bargain flat-screen televisions and $29 DVD players to lines of customers clutching newspaper advertisements were a ''very, very mixed bag,'' said Matt Fassler, who covers the group for Goldman Sachs. ''Best Buy stood alone,'' he said, while the others, including Circuit City, lost ground.

''The last 18 months have been a little challenging; the customer made a decision to spend a little less,'' said Burt Tansky, the chief executive of Neiman. But the holiday shoppers, he said, ''proved that luxury is alive.''

The nation's high-rolling shoppers, full of pent-up desire to spend, propelled luxury stores like Neiman Marcus, Tiffany and Saks Fifth Avenue to hearty increases last month, but over all, many merchants were disappointed by the holiday season. Store sales for last month, measured against the same stores open in December 2002, rose 3.7 percent, according to the Bloomberg composite same-store sales index. Last year, called one of the worst in decades by analysts, holiday sales rose 2.2 percent.

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This was the holiday season when merchants, particularly in apparel, tried to hold the line on deep discount sales -- and, by and large, succeeded, analysts said. ''The two biggest trends were high-end selling, and less promotional merchandise,'' said Margaret Mager, a retail analyst with Goldman Sachs.

Analysts said that, despite some disappointing results, retailers' profits might have risen nicely during the holiday period when the final accounting was complete. Earnings statements will be released next month.

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Bloomberg said its composite index rose 3.26 percent in November.