NEW YORK – After five years of a snowballing rush by consumers to post-Christmas sales, last week saw less fervent demand.
But sales still held up enough to enable stores to meet their December sales plans, even if some of the majors are expected to see sales at the low end of expectations. Many stores cited ongoing strength in gift card activity, early spring selling and escalated discounting on holiday goods as key factors keeping them on track.
Precisely how retailers fared in December won’t be known until Thursday, when most big retailers report comp-store sales. But the consensus among analysts is that sales gains were about 3 to 4 percent across the board. [For more on the outlook on December sales, see story on page 14.]
The post-Christmas week was affected by heavy storms on the West Coast and the loss of a Sunday when stores were closed for Christmas. Sunday was also the start of Hanukkah. In addition, retailers noted that consumers could have been shopped out after aggressive gift hunting in the days preceding the holidays. Many stores reported a surge on the Friday before Christmas and decent, but not great, business on Christmas Eve.
“Friday before Christmas was our biggest day ever,” said Ken Lakin, chairman and chief executive of Boscov’s, the Reading, Pa.-based regional department store chain.
The next few weeks are expected to see further traffic declines as stores push to clear out remaining holiday inventories and bring in spring goods. They are hoping for a lift around Valentine’s Day and a bigger lift around March when spring sales traditionally kick in. Currently, inventories are generally said to be in line.
Wal-Mart estimated that December same-store sales rose just 2.2 percent. Analysts had expected closer to 3 percent growth.
“We are in a similar boat,” said Lakin. Last week was good, but not monumental, he added. He said his chain was able to make up almost half of what it would have done had it not been closed Dec. 25. Overall, the month “was OK. It wasn’t terrific.”
“I didn’t think last week was quite what everyone thought it was going to be. People have come to expect it to be colossal,” said Bloomingdale’s chairman and ceo Michael Gould. Nevertheless, he said Bloomingdale’s hit its plan last week, and that gift cards were “phenomenal,” with more customers buying them and others redeeming them for merchandise.
One major Manhattan retailer said business was essentially flat last week but that December was still “excellent” overall and that the final week of the month remains very important, with each day’s sales planned to be 25 percent higher than on each day in the week after New Year’s.
Robert Mettler, chairman and ceo of Macy’s West, reported that the day after Christmas through New Year’s Eve was strong, trending similarly to the rest of December. However, two powerful storms dumped snow and rain on Northern California on Dec. 26 and Dec. 30, lowering expectations slightly. Mettler said the storms impacted business to some extent. The center core, including handbags and especially shoes, continued to be strong at Macy’s West, and the children’s business was a highlight of the season, Mettler said.
Keith Fulsher, senior vice president and general merchandise manager of Dress Barn, said his chain beat plan last week and last month. “It turned out to be a good month. Inventories are in good shape. Spring goods continue to sell very well, and we’re starting to see those with gift cards come back into the store.”
However, another New York City retail executive said, “I don’t think anybody had a fantastic Christmas. It was mixed around the country.”
“Retailers are probably happy it didn’t turn out worse, given all of the fundamentals of being a sub-par December were there,” observed Arnold Aronson, managing director of retail strategies, Kurt Salmon Associates. He cited high fuel costs, the fear of a housing bubble and people being credited out.
According to Aronson, in the last five years, post-Christmas selling has become bigger because customers have been trained to wait later in the year to capitalize on steeper price promotions. The rising popularity of gift cards has also boosted the post-Christmas business, he added.
Spending Pulse, a retail-sales data service from MasterCard, estimated that holiday spending increased 8.7 percent, driven by home furnishings, up 15.2 percent; consumer electronics, up 10.5 percent; women’s apparel, up 8.2 percent; sporting goods, up 6.4 percent, and men’s apparel, up 6.2 percent. Spending Pulse said spending in jewelry was down 4.6 percent.
MasterCard Advisors, a MasterCard-affiliated consulting firm, estimated total holiday sales were up 5.2 percent on an adjusted basis, versus an increase of 8.1 percent last year. Online holiday retail sales are expected to increase 24 percent to $19.6 billion, according to comScore Networks. According to the National Retail Federation, gift card sales were up 6.6 percent and total holiday sales are expected to be up 6 percent.
Sears last week saw strong interest in fine jewelry, Lands’ End apparel, home appliances, fitness products and tools, especially a Craftsman two-drill kit on sale for $99, while J.C. Penney cited the same seasonal items that have sold well throughout the month, including leather outerwear and boots, electronic games and accessories, children’s apparel and jewelry.
Michael McAvinue, general manager of the Mall at Short Hills in Short Hills, N.J., said the week between Dec. 26 and New Year’s Eve was extremely busy with parking decks filling up quicker than usual. The decks, which hold 6,100 cars, were filled to capacity by noon on Dec. 26 and remained full until 4:30. “New Year’s Eve was another huge day,” he said. “The restaurants were big winners.”
The mall’s department and specialty stores are expecting increases of 4 to 6 percent for the month. Gift cards were ubiquitous last week and retailers encouraged consumers to trade up to more expensive purchases. “This year seemed to be more promotional than last year,” McAvinue said, “especially among traditional upper-moderate stores such as Ann Taylor and J. Crew.”
Michael Celestino, executive vice president of stores at Barneys New York, singled out Dec. 26 and 31 as “clearly huge days. The whole week was strong. It pretty much mirrored the strength of the month. There was a lot of traffic in the stores.”
Barneys’ after-Christmas sale, which advertised discounts of up to 60 percent, was no more promotional than previous years, he said. Accessories, cosmetics, handbags, women’s shoes and the Co-op were winning categories, Celestino said. He added that the West Coast trended slightly stronger than the East Coast, last weeks’ storms in California notwithstanding. The company operates a full-line store in Beverly Hills and a Co-op unit in Costa Mesa, Calif.
“The transit strike hurt us,” but it could have pushed business into the week of Dec. 26, he said. The late Hanukkah, which began on Dec. 25, could have impacted the business as well. “It seldom falls post-Christmas,” Celestino added.
Mix in Houston experienced double-digit sales increases in December, said owner Evelyn Gorman. “Our margins were higher because of the pre-spring collections we had in the store. Our weather here is more conducive to pre-spring, but the people who love fashion want it early. We’ve had pre-spring in the store for about six weeks. It’s made a big difference. Regulars can only look at the same thing for so long.”
Gorman said the week following Christmas was “not bad at all and I fully expected it to be not very good. People came in with holiday money and we give gift cards to our best customers.” The store did especially well with Miu Miu and Stella McCartney, which are new to Mix. Chloé, Alexander McQueen, Roland Mouret and Lanvin were also strong.