Only a strong finish in the days leading up to and following Christmas has placed U.S. retailers on the verge of smashing the old record for holiday sales, which has stood for four years as the American economy has stumbled, declined and attempted to recover.

This story first appeared in the December 30, 2011 issue of WWD. Subscribe Today.

If the current estimate of a 3.8 percent increase in general merchandise, apparel and accessories, furniture and other categories, or GAFO, sales projected by the International Council of Shopping Centers is realized, as appears increasingly likely, U.S. holiday revenues would hit $252.3 billion, $600 million higher than the $251.7 billion reached in 2007, when holiday sales were up 1.6 percent. Since then, holiday sales have fallen 6.1 percent in 2008, to $236.3 billion, and dropped another 1.3 percent in 2009, to $233.4 billion, before moving back into positive but still subpeak territory with 4.1 percent growth last year to $242.9 billion, $8.8 billion below their historic high.

 

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The ICSC originally estimated that U.S. GAFO sales would increase a more modest 3 percent for holiday, which would have put them at $250.2 billion, $1.5 billion below their 2007 peak.

“We boosted the estimate after November figures came out,” said Michael Niemira, vice president of research and chief economist for the ICSC. Despite the strength of Black Friday, ICSC pegged November’s same-store sales increase at 3.2 percent, below the boost of 3.5 to 4 percent the economist had expected. He noted that, since the beginning of the current month, “some categories have been stronger and some have been flat.”

 

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Whatever their effect on the consumer’s psyche and to whatever degree they’ve been mitigated by accelerated promotional activity, higher prices for fashion products have boosted the dollars taken in by U.S. stores, and the inflationary trend is not expected to abate until the latter part of next year. Bright spots for the season have included e-commerce, sporting a 15.6 percent increase through Christmas Day, and luxury and higher-end retailers, benefitting from the less constrained spending and confidence of more affluent consumers.

Apparel and accessories have outperformed other merchandise categories, with men’s wear, boots and other footwear and accessories items standouts that have helped to offset weakness in more weather-sensitive categories, particularly outerwear. Many in the Northeast received a preview of winter when a freak snowstorm blew in on the final weekend of October but had seen few other signs of the season until cold weather came in this week. Even though temperatures are expected to moderate today, retailers are hoping to lift sales and reduce inventories of cold weather wear as the week and year end.

The dip in sales that took hold after the financial crisis of September 2008 affected virtually all categories of retailers, and, through 2010 at least, only a few had made their way back to their pre-recessionary levels. Apparel and accessories stores saw their sales plummet 11.2 percent during holiday 2008, to $45.6 billion, and were still below their 2007 high-water mark of $51.3 billion last year, when they grew 6.7 percent to $48.6 billion. General merchandise stores, a classification that includes department stores, were off 1.3 percent for holiday 2008, to $124.3 billion, but last year exceeded their 2007 record of $125.8 billion when their holiday sales rose 3.5 percent to $128.5 billion.

Estimates will begin to give way to hard numbers on Thursday, when U.S. retailers release their December same-store sales reports for December, and on Jan. 12, when the Commerce Department reports on November sales and inventories. December data are due Feb. 14.

Thomson Reuters on Thursday issued its first estimates for December same-store sales, highlighted by an overall projection of a 4.2 percent average increase for all stores involved. Strongest among the department stores were Macy’s Inc. and Saks Inc., estimated to grow 5.2 percent and 5 percent, respectively, followed by Nordstrom Inc., up 3.5 percent, and Dillard’s Inc., up 2.5 percent. Kohl’s Corp. is expected to post a 3.2 percent upward move, while J.C. Penney Co. Inc. is expected to report a flat result for the month.

Standout specialty stores are expected to include The Buckle Inc. and Zumiez Inc., up 6 percent and 5.4 percent, respectively, with Limited Brands Inc. up 4.5 percent. Weighed down by an 8 percent decline in its international unit and a 3 percent drop at Old Navy, Gap Inc. is projected to fall 0.5 percent. Among mass merchants, Target Corp., Ross Stores Inc. and The TJX Cos. Inc. are penciled in for increases of 4 percent, 3.7 percent and 1.8 percent, respectively.