By  on November 26, 2007

Hold your breath. This is going to be a hairy holiday season for retailers, one marked by see-sawing sales, market share warfare, profit concerns amid steep price promotions and a lot of angst and uncertainty.

But in the aftermath of Black Friday weekend, there's a sense of relief in the air.

The weekend got retailers off to a better-than-expected start — fueled by presunrise openings, a sharp temperature drop into the 30s, a battery of new marketing techniques and discount ploys and the frenzy of media coverage. Strong sales were particularly the case at big tourist-driven flagships in New York, Los Angeles and San Francisco, where strong traffic and sales compensated for less-robust performances in outlaying locations.

ShopperTrak RCT Corp. reported that U.S. sales on Black Friday rose 8.3 percent to $10.3 billion from $9.5 billion last year. But apparel generally remained weak, apart from some designer labels and contemporary styles. The winner, as in past years, was the electronics category, driven by GPS systems, digital photo frames and flat-screen TVs priced under $1,000. In clothing and accessories, fashion outerwear, patterned cashmeres, day dresses, cold-weather accessories, contemporary sportswear, and jewelry, particularly diamonds, were the standouts. Ironically, few retailers cited gift cards though they are bound to be big as gift-hunters get desperate.

More than 147 million shoppers hit the stores on Black Friday weekend (Thursday through Sunday), up 4.8 percent from last year, according to a National Retail Federation estimate based on a poll taken by BIG Research of 2,595 consumers November 22-24.

"Every year I go to a different stores on Black Friday," said Ron Klein, chairman and chief executive officer of Macy's East. "This year, I drove past many in New Jersey. Anecdotally speaking, and this is completely unscientific, I would say that people waiting for the openings was a visually larger scene than in the last few years."

Less impressive was the actual dollars being spent, nationwide. Consumers shelled out, on average, $347.44, down 3.5 percent from last year, according to the NRF. Nevertheless, the trade organization believes retailers made up for the lower average expenditure with increased traffic.

"She may be spending less, and I don't mind that as long as she's spending more with us," said Terry Lundgren, Macy's Inc. chairman, ceo and president. "Taking market share is totally our focus."Commenting on business as of around midday Black Friday, Lundgren said, "So far, so good" and added that with the temperature drop, "Retailers can no longer use the weather as an excuse."

While not quite elated, Lundgren and other retailers were relieved by the turnout and even expressed optimism. However, it's way too soon to revise any forecasts, which call for flat to modest single-digit comp-store gains at best and reflect consumers becoming more frugal and fickle than last year due to rising fuel costs, the slumping housing market and the declining macroeconomic picture. Nervousness has even hit the luxury sector, with Wall Street bonuses expected to take a tumble.

The holiday season can account for 20 percent to as much as 40 percent of a retailer's annual revenues.

Getting a read on the season is complicated by shifts in the retail calendar, with fiscal November ending later than last year, and fiscal December ending earlier. But ultimately, it's a favorable scenario since there is one more day between Thanksgiving and Christmas this year, 32 versus 31 in 2006, and Christmas falls on a Tuesday, providing stores a full final weekend of holiday selling, plus Christmas Eve day, which many workers are likely to take off for last-minute shopping.

"There are so many pieces to this puzzle this season, between the tourism factor, energy prices, the housing slump, credit jitters, the whole Wall Street thing, and the onset of cold weather, which is a positive," observed Jane Elfers, president and ceo of Lord & Taylor. "I'd say there are lots of moving parts."

That's created some debate on the significance of Black Friday weekend. "I'm not sure Black Friday is a barometer," for how the season evolves, noted Arnie Orlick, ceo of Fortunoff.

However, after what he described as very strong Friday and Saturday business, ahead over 20 percent, he said the weekend nevertheless, "makes us a little more optimistic than everything we have been reading in newspapers up until Black Friday. But it's hard to say it's going to be a spectacular season, a single-digit season, or whether it will be tough."

Lundgren, on the other hand, reads a lot into Black Friday. It's the largest volume day of the year for Macy's, he said, without specifying, adding, "It's very important to come out of the gate strong. If you don't have a great weekend, it may indicate you don't have the right merchandise or marketing strategy."And while there remains immense uncertainty about this holiday, one thing is for sure — the season will be no exception to the pattern of the past decade and will all come down to the final stretch. "Though Black Friday weekend was a complete success for many retailers, the results of the holiday season won't be determined until the last two weeks of December," said NRF president and ceo Tracy Mullin.

The outcome will depend on how retailers promoted. "If you promote more, you have to expect less margin," said Claudio del Vecchio, chairman and ceo of Brooks Bros., which does not take a promotional posture on Black Friday weekend. "It costs money to promote."

"People thought it was a more promotional weekend regardless of whether it really was or not," said Keith Fulsher, executive vice president and chief merchandising officer of Dress Barn. "There was definitely more media play, and maybe the illusion of higher promoting."

So what about the mood? "I don't know if I would call it panic," Fulsher said. "I just think it's an effort to protect market share and try to cover all bases."


At Macy's, cashmere is selling well in apparel, in part due to a broader offering ranging from traditional solids and pullovers to more unusual zipper front and patterned styles. Coats, scarves and boots picked up with the cooler weather and home is starting to turn around, Lundgren said.

Macy's also stocked up on small appliances, like Cuisinart food processors, and coffee makers, which were offered at sharp discounts. "We got very aggressive with small appliances," Lundgren said.

Macy's East's Klein expects a big wool year, cashmere to continue "exceeding expectations" and strong performances in "our affordable luxury component, including fine and fashion watches, and jewelry, notably diamonds.

"Those are wants, not needs. The want-based businesses are showing signs of strengths."

The response to Macy's Martha Stewart Collection "portends well. I am optimistic that we will achieve our objective with Martha Stewart," said Klein.Midday on Friday, Robert Mettler, ceo of Macy's West, reported that crowds appeared bigger than last year. Macy's West opened at 6 a.m., and Mettler said its promotional program was "pretty much a carbon copy of last year." However, he added that Macy's West was "careful about inventory levels so we don't have a glut."

"The season is long, and I don't think it is anything more than a great big day."

"What does it all mean? I don't know," said Michael Gould, chairman and ceo of Bloomingdale's. "But there was a wonderful beat out there over the weekend. Almost everywhere it was cold and dry," meaning ideal for selling winter goods.

Gould cited dressy accessories, handbags, contemporary sportswear, cashmere, coats, and certain designer businesses like Chanel and Louis Vuitton as "spectacular," adding, "Over the last three weeks, there's been a real pickup in our business. There are a lot of good things going on. All the upscale business is terrific. Our business is being dramatically fueled by tourists, both international and domestic."

J.C. Penney cited a strong Black Friday performance across all merchandise categories, notably in expanded "redbox gifts" offering fine jewelry, housewares, junior's, young men's and children's assortments.

"While we are encouraged by our strong start, it is still early in the holiday season and we are mindful of the headwinds consumers are facing," Penney's said in a statement.

Lord & Taylor cited coats and cold-weather accessories for men, women and kids, cashmere sweaters, Uggs and women's activewear as leading sales over the weekend. "I keep reading over and over that there is not a must-have item this season. I disagree. The must-have item is cold-weather merchandise- a coat, a glove, a hat a scarf or a warm boot," said ceo Elfers. "The coat assortment looks the best it has in years — the new silhouettes in belted shorter wools and the new more modern outerwear are some of the most fashion-forward styles on the floor. The long glove has sold since it hit the floor in August, and there is a focus on head wear this season with a number of new hat shapes in the assortment. The boot assortment is filled with new styles this year, many with shearling trim."When you take the fashion element of the cold-weather merchandise this year and couple it with below average temperatures, you have a winning combination. We haven't had seasonably cold weather in years and there is big pent-up demand for this product, which will continue throughout the holiday season." Elfers added that L&T's promotional cadence was similar to last year.


Dress Barn, which has been experiencing a difficult fall, saw no change in the trend last weekend, said Fulsher. On the bright side, dressier and special occasion apparel is selling, as are fashion outerwear and jewelry. "The weather has helped a little bit with sweaters but it's still a difficult business," Fulsher said.

Maurices had "a solid weekend" marked by mid-single-digit comp gains, on or a little above plan for Friday and Saturday. "We came out better than expected," Lisa Rhodes, executive vice president and chief merchandising officer, said. "The next two weeks will be a bit of a lull and then we'll get the spike. There are more days between Christmas and Thanksgiving and that puts off purchasing since everyone feels they have more time."

She cited casual and dressy knit tops, fashion outerwear and denim as "solid" businesses. Dress Barn and Maurices are divisions of Dress Barn Inc.

One specialty retailer, who requested anonymity, said, "Our business was flat Black Friday, but really not that bad, and Saturday was slightly positive."

At Brooks Bros., "We made last year's volume, but we didn't make the plan though we pretty much met our expectations for the two days," said del Vecchio. "Our margin was a little better than we expected. We didn't promote. We were full price," except for a 15 percent discount for early birds Friday morning.

"Our Christmas customer is not really looking for bargains. Our biggest promotion is the day after Christmas," when the chain stages its semiannual sale. "We don't have great expectations at this point," with the goal being 8 or 9 percent in total sales for the season, and 1 or 2 percent ahead on a comp-store basis, del Vecchio said. "For us to be able to do that without heavy promotion will be very good."At Abercrombie & Fitch, denim and fleece have been trending well. "It looks like the malls are promotional again this year; however, each of our brands will maintain a full-price posture throughout the holiday," said Tom Lennox, vice president of communications.

At Gap Inc., "We expect it to be a challenging season for Gap and all our brands," said a spokesman. "We opened earlier hours trying to get people in off the bat and get them buying."

Old Navy door-busters included MP3 players given to the first customers in the store between 5 a.m. and 8 a.m. Gap also offered 30 percent discounts to early-bird shoppers.

At Gap, the merchandise focused on "color and optimism, with a stronger point of view." The focal point was striped sweaters and scarves for men, women and kids. Old Navy's hot seller was attractively priced cashmere sweaters.

Juicy Couture reported its 36 directly operated U.S. stores were tracking 10 percent comp gains over last year's Black Friday, said Beth Cohn, vice president of retail. Shoppers waited in line outside of the Rodeo Drive store, which opened at 10 a.m., though the highest-grossing stores on Black Friday were in Scottsdale (Fashion Square) and Houston Galleria, followed by Rodeo Drive. The most popular items included velour tracksuits, pants, T-shirts, boxed jewelry sets, patent leather handbags and ballet flats. "We have some items marked down but the full-price merchandise is driving sales," she said.

Traffic was not overwhelming at American Rag. Still, ceo Mark Werts was pleasantly surprised that sales were slightly above last year's Black Friday totals. "That hasn't been the trend for the year. That for us portends a reasonable fourth quarter," said Werts. "The hype of [Black Friday] is bigger than the reality. It sells newspapers."

"It was kind of slow, I was disappointed," admitted Lori Parkerson, owner of the Redeem specialty shop on 14th Street N.W. in Washington. The funky shop carries brands such as Bern 'n' Violet and Gentle Fawn.


Saks Fifth Avenue chairman and ceo Steve Sadove reported a "solid weekend in terms of the numbers" and singled out the Fifth Avenue flagship and Off-5th outlets as exceptional. "There were European tourists walking around with suitcases," to load up on purchases, Sadove said. Among the best-selling categories were handbags, cold-weather accessories, men's wear "across the board" and the "modern" side of bridge such as Akris Punto, Theory, Tahari and Tory Burch."There is no question the customer is out there. New York had very, very good traffic," Sadove said.

Bob Mitchell, president of Mitchells, Richards and Marshs in Connecticut and Long Island, said: "The traffic was steady, but not crazy and sales were good, not great. We are ahead mid-single digits but those two days [Friday and Saturday] are not great indicators for us for holiday. Our real busy period starts 12 days before Christmas . Our customers are scared away by the media hype of crowds. We are not opening at 4 a.m. or giving things away at 50 percent. The luxury customer is usually home with the family for these couple of days.

"In women's, our shoe business continues to be strong; women's designer has come on strongly again, and we are finally seeing our outerwear business kick into gear in both women's and men's. Luxury casual, which is Loro Piana, Brunello Cucenelli and Agnona all have been standouts for the fall and we expect that to continue for the holiday."

Upscale shops tend to be quieter around Black Friday, and see quality shopping rather than quantity traffic. "Our customers‚ shopping gets done two weeks before Christmas not now," said Louis Boston owner Debi Greenberg. "Last year, which was a good Christmas shopping season for us, Friday and Saturday [after Thanksgiving] were weak at best."

She said gift items such as Mrs. John L. Strong engraved stationary, vintage Christmas tree ornaments and Francis Palmer handmade pottery vases were selling well.

Leslee Korff, owner of Serenella on Newbury Street in Boston, which sells Versace, Bottega Veneta and other international labels, said her customers lined up holiday outfits last week and fled town as soon as schools let out.

A Brioni cocktail dress with internal corseting, at $2,955, a half-moon shaped Bottega Veneta clutch, $1,980, and a filmy Alberta Ferretti dress, $1,895, were top sellers. "We have been selling a lot of dressy holiday merchandise," she said.

Mario's in Seattle and Portland said clear skies and temperatures in the 30s and 40s brought out shoppers seeking outerwear, boots and scarves for themselves. And they weren't bargain-hunters: Hot sellers included coats by Jil Sander, Prada Linea Rosa and Loro Piana that retail between $1,500 and $2,500 and Lanvin patent leather boots for $890."It was 'Buy now, wear now,"" said lead buyer and women's fashion director Lynwood Holmberg. "We feel traffic was up over last year at both stores. We are in a luxury category, so those customers, while they may be more cautious, are still shopping." She noted the patterns were similar at Seattle and Portland, though Portland saw brisker handbag sales by Miu Miu and Christian Louboutin.

At the more casual Mario's store in the Portland suburb of Bridgeport, 3.1 Phillip Lim and Paige Premium Denim were big sellers.

In Houston, luxury specialty store La Mode Lingerie tripled its business on Friday compared with a year ago, said owner Rachel Clements, citing the store's move to a bigger locale and rising demand for pricy lingerie and loungewear as well as designer swimwear that was recently added to the store's mix.

"So far most of our shoppers are buying for themselves —they're not ready to think about gifts — that will come later in the season. We also saw an increase in first-time shoppers, including a few who spent at least $2,000," said Clements.

Neiman Marcus appeared more promotional than usual in November, offering free shipping on its Web site for most of the month. In stores, the chain on Nov. 23 to 25 allowed anyone who spent $150 to pick up a tin of chocolate chip cookies and a cookie jar valued at $20.


ComScore Inc. said consumers spent more than $9.3 billion online Nov. 1 through 23, marking a 17-percent gain versus the corresponding days last year on gift spending. Online retail spending was strong on both Thanksgiving Day (up 29 percent to $272 million) and Black Friday (up 22 percent to $531 million), outpacing the season-to-date growth rate.

According to a survey, conducted this weekend by BIGresearch, 72 million consumers plan to shop online from home or at work today, up from 60.7 million in 2006 and 59 million in 2005. The survey found that 31.9 percent of adults will shop on Cyber Monday, up 17.3 percent over last year.

"Retailers will be unveiling a variety of incredible one-day sales on Cyber Monday to bring consumers to their Web sites," said Scott Silverman, executive director of "Online retailers consider Cyber Monday a virtual Black Friday and will be offering promotions that will be tough to beat later in the holiday season."At Bluefly, "Wednesday and Thursday we had single-digit increases, which didn't make me feel so good. Friday was really strong with a double-digit increase and Saturday was the same," with gains ranging from mid-teens to the mid-twenties, said Melissa Payner, president and ceo.

For Cyber Monday, Bluefly runs a 10 percent off anything sale, rather than typically putting an individual category on sale. Payner cited patterned cashmere, and the color red whether it's a shoe, handbag, wallet, tie or dress, as among top sellers. "I feel we are going to have a healthy season, but I couldn't say exactly how healthy cause its kind of tough out there. It's a little early to make a judgment call."


Wal-Mart, which has offered splashy bargains every Friday in November, focused on extending the "Black Friday" concept throughout the weekend. The retailer offered special online deals, such as a Zune MP3 player for $98.87, on Thanksgiving Day. Friday kicked off with early-bird specials starting at 5 a.m. Wal-Mart hoped to continue the momentum with a fresh round of deals on Saturday.

As in years past, the majority of Wal-Mart's specials were in electronics, such as a 42-inch Polaroid flat-screen televisions for $788 and a Kitchen-Aid mixer for $139. In its Thanksgiving television spots, the retailer touted NFL sweatshirts at $10, but did not make apparel a major promotional statement. Wal-Mart has been pushing basics priced $10 and under, a strategy it hopes will improve its apparel business. The retailer said it would not comment on Black Friday sales or traffic.

Target opened at 6 a.m. Friday, an hour later than Wal-Mart and two hours after J.C. Penney and Kohl's, which opened at 4 a.m. The Minneapolis-based retailer, which once orchestrated Black Friday shopping wake-up calls to customers, again showed marketing flair touting its "Race to the 2-Day Sale." The company sponsored a Thanksgiving showing of Pixar's "The Incredibles," interrupted periodically by a graphic of a man racing a cart loaded with a bulls-eye across the bottom of the screen. The graphic corresponded to an elaborate online game, where participants competed for $25 gift certificates. In a Boston-area circular, however, Target's apparel offering was safe and modest: ribbed sweaters for $8.99 and two-piece pajama sets at $9.99. Designer Erin Fetherston, the latest installment of Go International, represented the retailer's premium offering. Her prices hit as high as $89.99 for a wool-blend coat.Michele Rothstein, senior vice president of Chelsea Property Group, a division of Simon Property Group, said the firm's outlet centers had early openings on Saturday and Sunday. She said preliminary traffic reports were positive as consumers swarmed in early to hunt for bargains.

Rothstein said many of the company's outlet stores opened at midnight on Black Friday. "Shoppers lined up several hours before," she said. "At

Filene's Basement in Boston offered a scratch-card promotion from 6 a.m. until noon where customers found out at the register if they'd gotten from 10 percent up to 50 percent off their entire purchase.

Hours after the promotion wrapped, crowds still jammed the store, trying on clothes right in the aisles and pulling goods off mannequins. Cold-weather accessories, contemporary denim and designer sportswear were the biggest sellers, observed a sales associate.

— With contributions by Rachel Brown and Marcy Medina, Los Angeles; Kate Bowers, Boston; Rusty Williamson, Dallas; Georgia Lee, Atlanta, and Evan Clark, Washington

PHOTOS BY Danny Acres; Pasha Antonov; Tyler Boye; Jimi Celeste AND Nan Coulter

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