That late Christmas rush, which usually surfaces at least by the weekend preceding Christmas and builds until the afternoon of Christmas Eve, just didn’t materialize the way retailers wanted. While malls and downtown stores did report decent traffic this past weekend, the level of shopping did nothing to change the outlook for the season. By and large, it’s been disappointing, and it looks like it will stay that way for the remainder of the holiday shopping period.
Desperate for business, many retailers over the past several days felt forced into unplanned markdowns. Generally, they say they’ve been adept at managing the merchandise through this challenging season, and had all along set conservative sales goals. That means profits for the fourth quarter, which for most retailers concludes at the end of January, may not be as bleak as the current mood, and there is still some time left to perk up results a bit, if consumers respond to the bevy of sharp discounts that will be offered during the days between Christmas and New Year’s.
Retailers are also hoping for a surge in traffic between Christmas and New Year’s since it’s been a record season for gift certificates and electronic gift cards. While those are recorded as sales when they are purchased, they bring people back into the stores after Christmas, when they might not only redeem the cards for merchandise, but also purchase more.
While the consumer has been holding back because of concerns about a possible war with Iraq, high unemployment and an economy that’s not particularly recovering, some merchandise categories have performed well, including jewelry, outerwear, scarves, gloves, hats, handbags, sweaters, men’s accessories, leather and suede, books and some electronics.
However, on Monday, Wal-Mart hammered home the tone for the season, announcing that December sales at stores open at least a year were running at the low end of its expectations. Still, the world’s biggest company left room open for some fourth-quarter improvement. Its assessment didn’t include Saturday, which for most retailers is the biggest shopping day of the year, or Sunday. The company said total U.S. comp sales are tracking around the low end of the 3 to 5 percent range, and that the disappointment was more with the level of traffic, rather than with how much each shopper purchased.At the other end of the retail spectrum, the experience wasn’t all that different. As Ron Frasch, chairman and chief executive of Bergdorf Goodman, said, "The weekend was just OK. Certainly, we did not have the intensity that we had anticipated. It was good, but not over-the-top. Thank God for the first 18 days of the month, which were strong. The last few days did not have the same pace, but the business this year has been so hard to read because of the calendar."
Retailers have been perplexed by the shift to six fewer days this year, and indeed that led many consumers to shop earlier, rather than waiting to the very last minute, which they historically do.
At Wal-Mart, the strongest categories were crafts, intimate apparel, pet supplies, seasonal, household chemicals and pharmacy. The northeast region was the strongest for the week. Furthermore, all comparisons must be made bearing in mind the impact of 9/11. Wal-Mart stock was down $1.20, or 2.4 percent Monday, to $49.59 on the New York Stock Exchange.
A bleak Federated Department Stores said Monday its sales for the November-December period would likely fall short of its forecast, with demand not as strong as hoped last week. Same-store sales could be under the flat to down 2.5 percent for November-December period.Federated’s assessment included Saturday. Federated’s stock Monday closed down $1.08, or3.7 percent, finishing the day’s trading at $27.84
Target Corp. on Monday said sales at its stores open at least a year fell well below expectations for the third straight week, hurt by dismal sales of apparel and sporting goods. Target also said that same-store sales for December so far are sharply off its growth forecast of between 3 and 5 percent. Shares of Target Corp., which also operates Mervyn’s and Marshall Field’s, fell 4.5 percent to close at $28.54 on the Big Board.
Following the trend, J.C. Penney Co. said that last week’s sales were slightly weaker than expected, but the company, which is among the most aggressive promoters this year, said it was still on track to beat its forecast for December of a low-single-digit gain. Shoes, children’s and home products were among the strongest categories last week. While Eckerd drug stores is running at a good clip, up 6 percent in the month, catalog sales are down 20 percent.ShopKo Stores Inc. also reported same-store sales last week fell below expectations, which means that the discounter may be under its plan for sales to be even with a year ago for December.
According to a report from Merrill Lynch, authored by Daniel Barry, broadline retailers showed little improvement in the third week of the December period, ended this past Saturday. Consequently, the Wall Street firm now expects sales and profit warnings over the coming weeks. Merrill said that sales were hindered last week by unusually wet conditions on the West Coast, and some warmer temperatures in the East Coast, after colder-than-normal weather earlier in the month.
Merrill revised downward its prediction on broadline comp sales for December, to flat versus the original forecast of a 1 to 2 percent.
Planalytics,a firm that helps retailers in their merchandise based on weather trends and predictions, projected Monday a continuation of the recent warming trend through the remainder of the month — which isn’t good for business. Last week, California had heavy rain, and shoppers there, Planalytics noted, tend to stay home when it’s wet outside. For the last full shopping week, the stormy conditions favored Internet shopping sites and worked against brick-and-mortar retailers. The majority of North America experienced the late season warming trend, meaning some slowing of sales of cold weather apparel items that had been selling well since mid-October. Planalytics also said that a notable exception last week was Florida, where relatively cold weather remained very favorable for driving demand of cold weather apparel items.
Colder weather earlier in the fall, however, did drive outerwear sales, including furs, leather and shearlings. For a related story, see page 8.
Manhattan stores seemed busy, and in some cases, executives were upbeat.
"We had a good weekend," said Hal Kahn, chairman and chief executive of Macy’s East, on Monday. "Customers came out, and we expect today and tomorrow, and the last few days between Christmas and New Year’s will be stronger than the last three weeks, but still at the low end of expectations."
One store apparently bucking the general trend was Lacoste. Bob Siegel, chairman of Lacoste USA, said, "Our business was off the charts. Saturday was the biggest day we ever had at our Madison Avenue store." He also said that the Lacoste store in the Westchester Mall in White Plains had a record day, too. He attributed the business to the resurgence of the Lacoste brand and multigenerational appeal, and because the Lacoste signature knit shirts, priced from $69 to $80, are "easy gifts," he said. "Most people can wear them. There is no age hangup."In a report on traffic at several of its malls around the country, Taubman Centers said sales and traffic were a bit off on Sunday, but it wasn’t a bad day, though not quite what the stores had hoped. Bestsellers on last-minute shopping lists were often gift certificates, spa packages and jewelry.
Stores at Taubman’s upscale Mall at Short Hills in New Jersey trended in the low-to-mid-single digits for the week over last year, and strong categories Saturday were home, electronics, apparel, accessories and beauty.
At The Mall at Wellington Green, Wellington, Fla., another Taubman property, the big winners Saturday were jewelry stores, fragrance and cosmetic stores, electronics, games, toys, music and gift stores.
At The Mall at Tuttle Crossing in Dublin, Ohio, traffic was high and steady all day long. Although parking lots did not exceed 80 percent capacity, merchants seemed content with the day’s business, but not exceptionally enthusiastic. Gift certificate sales were up 47 percent for the day.
Generally, traffic at malls was softer Sunday than Saturday, with Wellington Green indicating that shoppers came early and left late on Saturday, while they came early on Sunday but left earlier. The Westfarms Mall in Connecticut reported that traffic peaked by 2 p.m. Sunday, when it began tapering off.
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