NEW YORK — Though holiday traffic and sales have been shy of expectations, retailers aren’t issuing autopsy reports on the season. Not just yet.
They say a blast of cold air this week should lift outerwear sales; that consumers are delaying purchasing to capture ever-growing markdowns on the last couple of days before Christmas; that online and gift card sales keep accelerating, and the post-Christmas week could be big.
Department stores and discounters have gotten the cold shoulder from consumers, while luxury stores, some specialty chains, and Web sites — offering deliveries often as late as Dec. 22 to arrive in time for Christmas — are holding up.
On Monday, many executives lamented the season, saying it’s been dragged down by a lack of hot items, warm weather for most of December, high fuel costs and credit concerns.
“It’s awful,” said one department store official, describing the season. “All we can do is wait. You just can’t get any cheaper on the goods. There’s nowhere to go but up.”
“The lower-income customer is really waiting,” said one retail chief executive, while a sales clerk at the Dollar General store on Marsh Lane in northwest Dallas said, “The idea is to save money, no matter where you have to go.”
Sounding a hopeful, yet cautious note, Tracy Mullin, president and ceo of the National Retail Federation, said, “We believe that consumers still have about 20 percent of their shopping left to do. It’s a solid, but not spectacular, season. We think [the industry is] on track to do about 4.5 percent over last year for the November-December holiday period,” she said, referring to NRF’s earlier prediction on total sales increases. The holiday verdict rests on how soon consumers redeem gift cards, which, for the third year in a row, are hot. Most retailers record them as sales after the cards get redeemed.
“Don’t just look at comp-store sales. That’s just one part of the picture,” Mullin said. “We look at GAFS sales, the Internet, new stores and gift cards.” She said post-Christmas will be a “no holds barred” situation. “Retailers have done a good job keeping inventories lean. But they still have white elephants.”NRF said 12 million consumers as of Sunday hadn’t started to buy gifts, basing the statistic on a telephone survey of 2,576 people conducted Friday through Sunday. The average person has spent $511.77 on gifts so far, and by Friday will have shelled out $702.03 on gifts and $89.25 on themselves.
“The weekend was tough,” said Ken Lakin, chairman and ceo of Boscov’s, the Pennsylvania-based department store chain. “Friday was down a bit. We made the day on Saturday, and we just barely eked out the week. We were up 0.5 percent. That was encouraging.” Weekend comparisons were difficult because last year those days were closer to Christmas, which fell on a Thursday, compared with Saturday this year. Therefore, Wednesday, Thursday and Friday this week should be plus days, Lakin predicted.
“Saturday was almost even with last year, a little bit down. Sunday was disappointing,” said Michael Mastriano, owner of Tango, an 1,800-square-foot, upscale specialty store in Brooklyn Heights, New York, which does a lot of bridge business with such lines as Max Mara, Tahari and Theory. He said the cold weather could spur business, but not necessarily right away. “People are in shock the first cold day, but today we sold 10 scarves.”
For those experiencing a poor weekend, “you can’t really compensate for that. It’s too late,” Mastriano said. “Right now, we’re running neck and neck with last year. We hoped to do 5 percent better. It’s not going to happen, unless we have a banner week, which I don’t expect.”
“First, it was too warm and cold-weather categories didn’t kick in. Now, it’s too cold and people don’t want to go out,” observed Roseanne Cumella, senior vice president, Doneger Group. “The season isn’t disastrous. It very boringly flat.”
Keeping retailers alive this season, according to Cumella, are accessories, driven by status handbags; Ugg and Ugg look-alikes; fur accessories and items with fur trims; ponchos; gift sets, particularly shirts and ties and pajamas and robes at the mass level; men’s woven shirts; brooches, charms, beads and key rings; cashmere, though at a price; status denim; contemporary sportswear; flirty skirts; novelty jackets; bling; embellishments, and metallics.There’s also much on the down side, namely outerwear, moderate sportswear, dresses, most of children’s wear except infants and toddlers, juniors’ — excluding novelty denim — and tailored men’s wear, Cumella noted.
According to a Goldman Sachs in-store check on 40 apparel retailers, markdown and promotional activities last Saturday were more extensive than Black Friday 2004 and Super Saturday last year. Weak morning traffic suggested “a tired shopper or a smarter shopper waiting for further markdowns.”
While malls may be down, the Internet is up. ComScore Networks reported that online nontravel (retail) spending will exceed $15 billion during November-December, rising roughly 25 percent over last year’s season. Total nontravel quarterly spending will cross the $20 billion threshold for the first time in the fourth quarter. ComScore also said online sales “dramatically accelerated” during the five days ending Friday. Consumers spent $2.03 billion between Dec. 13 and Dec. 17, or 49 percent more compared with the same days last year.
Gary Yiatchos, executive vice president of marketing at Parisian, characterized the weekend’s sales and traffic as “good, but not a frenzy” with apparel sales “spotty and uneven.” Cashmere sweaters did best and discounts were deepest in cold-weather goods. Strong categories included intimate apparel and accessories, electronic games and electronic gift cards.
Jeffrey, a designer shop in Atlanta and New York, said sales for the combined stores are on track at 20 percent above last year for December. Jeffrey Kalinsky, owner, said he would keep fall markdowns at 40 percent off until Christmas. “Inventories are in good shape. On Wednesday in the Atlanta store, we only had 400 pieces of fall ready-to-wear left. In New York, we had only 1,200 pairs of shoes left. We’re in good position for this merchandise, which will be on sale through Feb. 1.” Kalinsky said he expected the week after Christmas, a time when people have money to spend on themselves, to be the biggest week in December, as it has for the past 15 years.
Bob Goodfriend, chairman and ceo of Goody’s Family Clothing, said Christmas business remains “mixed” and “item-driven.” Promotional activity, a hallmark of Goody’s, has been augmented this year by “lots of hooks” including “seniors’ days” and 50 percent off certain items at certain times. “We have great weekends and mediocre days,” he said. “We’re hoping for a big rush the last five days….For Christmas going forward, we may need to be narrower and deeper, identifying key items and focusing on them,” he said. Goody’s best-selling items, the Cushie Pillow by Westminster and The Squish Pillow by Homedics, will sell 1 million units this month.In Southern California, Glendale Galleria spokeswoman Janet LaFevre said the mall was on track for a 3 to 4 percent increase over last year. “The challenge with L.A. is that we’re having an incredibly warm season,” said LaFevre. “The key will be the gift cards because people will come back to use them in January.”
At Mervyn’s, the Hayward, Calif.-based discount retailer, “sales are trending up,” said spokesman Greg Terk, though he didn’t get specific. “We’re on target and we’re a promotional retailer, so January will be important.”
In a recorded weekly sales update released on Dec. 18, Wal-Mart reiterated its projection of 1 to 3 percent comp-store sales gains, lowered from 2 to 4 percent initially. Last week, lagging general merchandise sales “improved,” food continued strong and gift card sales increased “significantly” over last year.
Wal-Mart, which earlier this year initiated wage and hour reforms that bumped up wages for some hourly workers, has been criticized by analysts this season for having too few people manning registers or handling returns.
Bernard Sands retail analyst Richard Hastings counted 20 carts stuffed with returned merchandise clustered around the customer service desk during a visit to a Wal-Mart Supercenter in Charlotte, N.C. “They do not have enough people on the floor,” he said. “They are watching their hourly wage rates and sales are not high enough for store managers to get budget approval from area managers for more seasonal help.” But Bob Buchanan, analyst for A.G. Edwards, said Wal-Mart, despite some sluggishness, will “come in range and salvage the core business.”
At a store in Danvers, Mass., the retailer didn’t appear to be panicking or broadly marking down goods. Perhaps clued in by weather forecasts calling for a cold snap in the Northeast, Wal-Mart was holding firm on outerwear prices. A trend-right selection of George coats, including peacoats, quilted car coats, leather jackets and fur-trimmed parkas, was selling at prices ranging from $29.44 to $77.86.
Marked-down goods appeared to be selling, including items slashed after Black Friday. The 20-inch Sanyo flat-screen television, at $128.68 from $148.72, was gone. Also, a huge bin of DVDs priced two for $11 was nearly empty Monday morning. Ditto the display of $5 Faded Glory watches and $10 White Stag ankle boots. Associates said Faded Glory chenille double V-neck sweaters were selling well.Target, seeking a 3 to 5 percent comp gain for December, appears to be doing somewhat better this holiday at restocking, consistently an operation bugaboo for the Minneapolis-based retailer. At a unit in Saugus, Mass., displays of stocking mantel hooks and holiday tablecloths, two items that were nearly gone a week ago, were replenished. However, the iPod display was picked clean. Also low on stock: a Sirius satellite radio endcap, which offered a $149.99 docking station and a $99.99 sound system.
But though the store appeared in better stock, the Saugus Target had a weather-related stumble. As slick, wet snow accumulated, the retailer was slow to clear its parking lot and to retrieve carts, which quickly became drippy and dirty. Inside at one point, bickering broke out between customers over a dry cart.
The stocking-stuffer aisles were jammed with shoppers and Target employees restocking goods. Merchandise was categorized by price with labels touting goods at $0.99, $1.99 and $2.99. Items ranged from bobble-head Santas to giant Hershey’s kisses. In apparel, a display of foil-printed $8.99 T-shirts at front did well, particularly one with the slogan “I live for drama.”
The store, spring-like in appearance with lots of pink and lime green, had only a handful of racks marked 30 percent off. The deals sometimes appeared to be inspiring purchases (as in a display of Gillian O’Malley bra and panty sets) and sometimes not (an Isaac Mizrahi display of cardigans with matching mittens).
— With contributions from Georgia Lee, Atlanta; Michelle Dalton Tyree, Los Angeles; Joanna Ramey, Washington; Rusty Williamson, Dallas, and Katherine Bowers, Boston
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