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Post-Christmas clearances and gift card redemptions have brought some relief to retailers’ holiday hangovers.

Many merchants said Wednesday that with the uptick, sales plans for the quarter were now attainable and inventories were under control. But there was concern that margins suffered and that consumers will tighten up even more in 2008, increasing the angst that seems to pervade the industry.

“It’s as if consumers feel they’re doing something wrong if they spend money,” said Lou Amendola, Brooks Brothers’ chief merchandising officer. “They’re almost afraid to spend. That’s what concerns me — this guilt factor.”

Presidential politics, the Iraq war, high gas prices, a volatile stock market and the housing slowdown are among the key economic factors that will continue to squeeze the apparel business and deter trips to the malls, experts said. Looking ahead, retailers are also worried about the early timing of Easter, which falls on March 23, compared with April 8 last year.

“Consumers are unsure of what 2008 is going to bring,” said C. Britt Beemer, founder and chairman of America’s Retail Group, a consumer research and marketing company.

Beemer characterized post-Christmas store traffic as on par with last year and believes consumers will wait longer to redeem gift cards. “They’re just more frugal and cost-conscious,” he said.

As far as the past holiday season, “There were a lot of consumers that just didn’t get their Christmas shopping done,” he said.

“Consumers flocked to stores to take advantage of post-Christmas sales and to begin redeeming gift cards, which was definitely a welcome sight for retailers,” Bill Martin, co-founder of ShopperTrak, which monitors consumer traffic, said in a statement.

However, as one department store executive noted, “Whatever business retailers got came at a very high markdown rate.”

Several executives noted that while gift cards made gains, they weren’t as robust as last year.

Standard & Poor’s Equity Research Services said retailers will post 3 to 3.5 percent holiday sales increases, though the range from other analyst and trade groups ranges from less than 3 percent to 4 percent.

This story first appeared in the January 3, 2008 issue of WWD.  Subscribe Today.

“While lackluster holiday sales this season have led to the belief that it could be the worst in five years, we believe all hope is not lost, and gift cards could provide a silver lining,” Mark Basham, consumer discretionary retail analyst for S&P, said in a statement. “Gift cards are increasingly becoming part of holiday shoppers’ plans, and this year the trend continued.

In fact, while the number of cards given may not have risen, the overall value is expected to increase this season,” Basham stated. “Although in-store buys may be off, gift card spending may pick up the slack, in our view, as items are purchased that complement these redemption sales and prolong the season.”

Michael Gould, Bloomingdale’s chairman and chief executive officer, said: “Our business since the Friday before Christmas has been particularly strong. The upscale business is extremely good. We’re [somewhat] optimistic.”

Lisa Rhodes, executive vice president and chief merchandising officer for Maurices, the 600-plus unit juniors chain, predicted “some healthy spring business out here, but the customer will be a bit more selective. Items that are multipurpose will be very dynamic. If it’s a top that someone can wear dressy to a club or dressed down with a pair of jeans, those kind of looks will be really, really strong.”

For spring, Maurices is selling lots of lace trim tank tops, priced $16 to $20, and three-quarter-length sleeve knits in patterns and solids, priced around $20, and eco-message screened Ts, at $18.

At Brooks Bros., post-Christmas has been the strongest part of the season. It’s when the company breaks its semiannual sale.

“It was the first week where we saw significant double-digit comps over last year and the first week we exceeded sales plan,” Amendola said.

The Dec. 26 through Jan. 4 period will represent more than 45 percent of the month’s business, he said.

“Inventories are very much in line mainly because on the men’s side, 60 to 70 percent is basic, replenishable inventory,” Amendola said. “On the women’s side, 95 percent is fashion but women’s had a huge acceleration between Christmas and New Year’s.”

Brooks Bros. started to deliver spring merchandise to stores in warm areas last week, and has done well with cotton sweaters from $69.50 to $148, and men’s dress shirts, ranging in price from $79.50 to $200.

“We are on track to make our plan for the quarter,” said Ken Lakin, chairman and ceo of Reading, Pa.-based Boscov’s department store chain.

Asked about spring, he responded, “Consumers are nervous. They don’t want to pile up too much debt. Some already have too much. There are mortgage issues, concerns about jobs, inflation, a sense of uncertainty and the unknown,” regarding who will be the next president and how long the war will last. “That usually doesn’t translate into a lot of consumer confidence. But it’s also kind of exciting, too, that there is a young black man and a woman in the race.”

Lakin said traffic last week was good, gift card sales were about even with last year, and among the bestsellers were diamonds, watches, cold weather merchandise, dresses, shoes, men’s casual slacks, better sportswear, comforters, flannel sheets and vacuum cleaners. He singled out Tahari women’s suits, Lauren sportswear and Hannah Montana girls’ merchandise.

At Maurices, business two weeks before Christmas was slower than anticipated, partly because of winter storms, but the week after Christmas was stronger than anticipated, Rhodes said. It proved to be the second biggest week of the month, next to the one leading up to Christmas. She acknowledged that managing the business through the season was trickier than in previous years.

Fall inventory levels by the beginning of February will be less than 15 percent of total inventories. “My guess is that a lot of other retailers won’t be there,” she added. “If you were heavy in fall winter inventory going into December, it could really hurt profitability.”

At Ron Herman in Los Angeles, “We sold more gift certificates this year,” making post-Christmas a busy time, said John Eshaya, vice president of women’s wear. “It was an easy, trendy thing to do this year. Nobody wants to think about what to gift.”

Now shoppers are coming in with an eye for themselves rather than stressing over gifts. Eshaya noted that tourists are buying sweatshirts from JET and Free City, while locals are purchasing dresses from Jill Stuart and 3.1 Phillip Lim.

Fraser Ross, the owner of Kitson in Los Angeles, said that although Christmas 2007 was down from 2006, four of the six days after Dec. 25 were busier than last year. “After-Christmas is just as strong as the pre-Christmas business, especially in our type of store where we do have a lot of younger customers getting gift cards,” he said. “They are eager to spend them. Ross described contemporary apparel as “flat” and “weak” post-holiday. However, jewelry and scarves from CC Skye, Missoni and Echo Designs were strong. One Of A Kind’s red string bracelets with gold hamsas for around $40 also sold briskly. But in apparel, “There was nothing new to get the consumer excited,” Ross said.

In the week between Christmas and New Year’s, National Jean Co. sold many sequin minidresses and wide-legged pants for New Year’s Eve events, said Steve Simon, co-owner. Madison Marcus, Graham & Spencer, Geren Ford and J Brand were key labels.

Intermix on Boston’s Newbury Street reported steady business last week, clearing out sale pieces from Chloé, Stella McCartney and Helmut Lang, said floor merchandise coordinator Matthew Pidge. Resort has been selling well, in particular Missoni bikinis, Jamison sweaters and Diane von Furstenberg dresses. He said inventory is low because of strong sales and that customers are responding to bright, clear colors, notably blue, yellow and orange.

Ed Bucciarelli, president and ceo of Henri Bendel, said business changed dramatically after Dec. 25 from gift-giving to self-purchasing. New resort products, including bright cashmere sweaters, some with stripes and patterns, and bright exotic handbags spurred much of the activity.

“Obviously, [fall] cashmere continues to sell tremendously during January,” he said. “It’s on promotion, 40 to 50 percent off. Clearly, we’re in a big clearance mode. But we’re relying less on promotional activity for cashmere.” Bendel’s introduced resort in November and December. “Resort sales have been brisk, Bucciarelli said. “It’s nice to see that the customer is responding to something new and fresh even though the other [discounted product] is there.”

Bob Mitchell, president of Mitchells, Richards and Marshs in Connecticut and Long Island, said post-holiday traffic was lighter than normal and that many luxury customers were still on vacation.

“We still ended up with an increase for the holiday time period,” he said, noting the gain was driven by women’s jewelry, shoes and luxury sportswear. “During the post-holiday time period, the combination of returns and sale has not been gangbusters. We found that during the holiday there was even more self-purchasing of high-end apparel and jewelry. The break of our sale has not been super strong. We’re not a big gift card store.” However, resort collections and unique products have been selling, he added.

— Contributions from Marcy Medina and Rachel Brown, Los Angeles; Kate Bowers, Boston, and Sharon Edelson, New York

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