NEW YORK — Retailers have nothing to rave about so far this holiday season.
Traffic has been generally ho-hum and no hot gift items have emerged on the fashion front. But several retail executives on Monday said shopping surges could materialize by Friday and with luck last through New Year’s, enabling them to hit sales goals. While there was some momentum noticed this past weekend, Black Friday’s mad dash to the malls is a distant memory.
“The feeling is that business is tough,” said one senior executive of a major national chain.
“I think it’s slower than we had anticipated, but we feel sure that the next two weeks is going have required level of volume to meet our plans,” said Andrew Jennings, president of Saks Fifth Avenue.
“We will have a better feeling about business toward the end of the week,” said Michael Gould, chairman and chief executive of Bloomingdale’s. “The very encouraging part of the whole holiday season is the level of self-purchasing.”
Pat Murphy Kerstein, executive vice president and chief merchandising officer of Chico’s, said, “This weekend really turned out a lot of shoppers. A lot of our customers are buying for themselves.”
“There is still uncertainty,” said another retail ceo. “Obviously, the snowstorm [last week] killed the Northeast. We got walloped. The general consensus is that there will be another late Christmas, but no one is panicky. No one is giving up hope, but people are starting to get nervous. It will come down to the last two weeks, and the week after Christmas is a big week.”
On average, retailers planned for total sales gains in the 4 to 6 percent range, and comp-store sales of roughly half that. Among the trends keeping them above water: strong selling in handbags, jewelry, boots, Western looks, scarves, gloves, men’s dress shirts, gift cards and electronics, particularly televisions, DVDs and iPods.
Retailers said the extra selling day this year and Hanukkah starting the same day as Christmas should translate to heavy last-minute shopping. The cold weather is already helping, but not when it’s snowy or icy. Adding to the uncertainty, more messy weather is expected this week and the threat of a transit strike in New York City on Friday looms. (See sidebar.)
This story first appeared in the December 13, 2005 issue of WWD. Subscribe Today.
Retail analyst Walter Loeb said, “Total sales will be 3 or 4 percent over last year, maybe 5 percent, depending on how much the extra day helps. It could help by 1 to 1.5 percent.”
“We have entered the most critical shopping period of the season with over 40 percent of holiday sales occurring the two weeks prior to Christmas,” said Merrill Lynch analyst Mark Friedman in a research report. “Stores were crowded over the weekend, but the biggest-volume days are still ahead of us. This is particularly true this year as an extra Saturday gives consumers a better opportunity to wait for last-minute deals.”
“Black Friday has not been a good indicator” of holiday sales, observed Jay McIntosh, Americas Director of Retail and Consumer Products for Ernst & Young LLP. “Six percent total retail sales will hold up against last year’s 8 percent.” He sees midtier department stores and discounters struggling the most this season.
“Business was OK. We were not terribly dissatisfied,” said ceo Bob Mettler of Macy’s West, speaking of last week. He cited jewelry, handbags (notably Coach), shoes, cowboy boots, denim-related belts and Western wear trends. “Sportswear is pretty good, coats are fair, sweaters picked up from November, though it’s not a particularly great sweater season. Ready-to-wear picked up last week, but there are no hot items of the season. The real big acceleration will be week four,” which is next week.
A Sears, Roebuck district manager in Dallas reported that electronics were good sellers, including plasma, LCD and tube TVs; digital cameras bundled with printers, and XBoxes. The manager also said Sears’ “little wish big book,” an accordion-style booklet of 25 suggested gifts distributed at Sears auto centers, encouraged sales. Another Sears district manager in Florida cited electronics, fine jewelry and major appliances, while a spokesman from Sears’ corporate office said cordless Craftsman drills and portable DVD players were bestsellers.
Wal-Mart appears to be back in the game, after a disappointing holiday ’04. The parking lot of a Danvers, Mass., Wal-Mart was jammed Sunday morning and checkout lines were up to five people deep. Instead of running the same fashions throughout Christmas as in the past, Wal-Mart had several new George styles, including chiffon prairie shirts for $15.57, brocade jackets for $22.82 and sparkle V-necks for $17.82. Candy, toys and electronics were the busiest sections.
A Target in Saugus, Mass., was not as busy as the Wal-Mart, but Target cleared much of the discounted apparel that clogged stores on Black Friday. Only 10 percent of its racks had signs for 30 to 50 percent off. The parking lot was full, and most shoppers clustered in holiday decor and wrappings, candy and food gifts, scented candles and toys.
Richard Hastings, retail analyst at Bernard Sands, said he’s noticed “erratic” shopping patterns in Target since October. “On Black Friday, the toys and electronics were extremely heavy, but the rest of the store was almost deserted,” he said.
“Markdowns stepped up this weekend at select retailers,” said Mark A. Friedman, specialty retail analyst at Merrill Lynch, in a research report. “Express was offering $20 off denim, 30 percent off knit pants and hoodies and 40 percent off sweaters and select tops. Zales was offering 10 percent off the entire store … However, others, surprisingly, had fewer than expected markdowns, including Gap and Banana. As we enter the final two weeks of holiday, we expect more aggressive markdowns at Eagle, Aéropostale, Gap, Old Navy, Banana, Express, Loft and Ann [Taylor] … As the holiday season continues, we believe increased promotions will give rise to concerns about holiday sales.”
Chico’s cited scarves, hats, gloves, novelty belts, key chains, watches, embellished jeans and spa wear.
A J. Crew spokeswoman said, “The stores were very crowded.” Cashmere sweaters and outerwear were popular, especially a stadium cloth coat for women at $325.
H&M cited dresses and velvet blazers for parties, chunky jewelry, heavy sweaters, denim and winter accessories.
Dan Nissanoff, founder of the Portero auction site, said watches and jewelry were still strong. However, in the last week, consumers have been gravitating toward unusual high-end items and experiences, he said. Offerings include four nights in Monaco, $14,500; two tickets to next year’s Victoria’s Secret fashion show and after-party, $10,000, and a Sports Illustrated swimsuit launch party, $1,000.
Federico Marchetti, founder of the Yoox luxury Web site, said the firm is shipping 2,000 orders per day this holiday. The firm has 500,000 items available online and has increased its average order this season. “They’re buying 2.2 or 2.3 or 2.5 items. Before, they bought 1.4. items,” he said.
— With contributions from Sharon Edelson and Katherine Bowers, Boston