Byline: David Moin / With contributions from Jennifer Weitzman / Anamaria Wilson, New York / Georgia Lee, Atlanta / Holly Haber, Dallas / Kristin Young, Los Angeles

NEW YORK — It may be too little too late.
With just seven days left before Christmas, retailers have yet to get into gear. Still, they are holding out hope for a surge in traffic and sales by the weekend, and a kick from the extra shopping day compared with last year. Even if they wind up near plan for the season, though, the question remains at what cost — this year’s flood of discounts, sooner and deeper than in recent memory, have substantially reduced profit margins.
Last week’s results provided little encouragement, as some major chains, including Kmart and Federated Department Stores, reported Monday that they fell short of plan. General Growth Properties, the nation’s second largest mall operator, reported traffic as flat.
Even Wal-Mart, which has been trending ahead of the retail industry all year and has a more aggressive plan than most, said it fell slightly below plan for last week through Friday. A spokesman told WWD that stores were busy over the weekend, suggesting that next week, Wal-Mart’s report will be better.
Based on the latest accounts from retailers around the country, consumers are still holding back and feeling as insecure about the economy and their jobs as they have all year. While some executives cited a pickup in recent days, most said that Chanukah hardly helped, that the warm weather keeps stifling outerwear sales at all price points and that they are still awaiting a real pickup.
For the week ahead, a late surge in business is certain, as consumers have shopped for gifts closer to Christmas for years, gambling that retailers get desperate and reach the point of giving away the store or at least significant margin, and that there’s still merchandise on the shelves worth buying.
It’s also practically a sure bet that whatever happens won’t really turn the tide.
“There could be a big rush, but it is not going to be a great Christmas, which is what we expected,” said Hal Kahn, chairman and chief executive officer of Macy’s East. “Our inventory is in line. We are very well positioned, inventory-wise, going into Christmas and will be better positioned going out of Christmas. We are cautiously approaching the first half of ’02.”
“We’re getting murdered by coats,” said another ceo from a national chain. “All cold-weather merchandise is still very tough. Coats are done. The season is over. Boots, sweaters and fashion accessories are driving the season. Big city stores are not doing well. People are just not spending a day in the city to shop like they used to.”
“Retailers have a chance to salvage the season, but they can not make up for lost business,” said Richard Jaffe, retail analyst at UBS Warburg. “They are planning for a disappointing Christmas. It is just a question of degree. It is the warmest fall we have seen in 30 years, but assortments were skewed to outerwear and sweaters since last year was one of the colder winters,” and at that time retailers were caught with insufficient inventories.
Dorothy Lakner, with CIBC World Markets, said consumers have another weekend to shop and are holding out for bigger discounts. She said she expects the upcoming weekend to be “pretty good” and could possibly be better than the comparable weekend last year, since Christmas Eve was on a Sunday, while this year it falls on a Monday, leaving consumers with a fuller weekend to shop.
Sales at specialty stores in the nation’s malls decreased 0.6 percent last week, according to the International Council of Shopping Centers. For the season to date, Nov. 23-Dec. 16, sales were down 3 percent. The ICSC weekly holiday report is based on sales from about 4,000 specialty stores in 80 regional malls. Apparel sales were down 3.3 percent; footwear slipped 2 percent; home furnishings and furniture rose 2.6 percent; jewelry rose 3.5 percent; music, video, and home entertainment, up 2.3 percent; stationery, cards and books fell 5.8 percent, and toys-sporting goods-other fell 6.5 percent.
At Wal-Mart, comparable-store sales at Wal-Mart Stores and Sam’s Club divisions were slightly below plan through Friday. Wal-Mart said December sales, so far, overall have fallen within the 4 to 6 percent comp-store plan, but should be on the low side of that plan for the month.
At Kmart, the plan for five weeks ending Jan. 2 is for a flat to 2 percent same-store gain. Last week, the chain was slightly below the plan. Hard lines did best, followed by home, food and consumables and drugstore items. In last place was apparel, which continues to run below last year, down in the mid-teen range.
Despite last week’s down performance, Kmart said it saw an increase in traffic over the weekend, against two weekends ago. For the month to date, the company is tracking below plan. But the company also said that it is “comfortable” about meeting its plan for the month, with 45 percent of December sales done in the last 10 shopping days before Christmas. To help meet the plan, Kmart said its stores, beginning Thursday, would be open for 110 hours straight until Christmas Eve.
On the brighter side, some stores, including Bloomingdale’s, Jeffrey and Canal Jeans, were pleased by pickups, though often the momentum was pegged to price cutting.
“We were a tad better than plan. I felt good about the week,” said Michael Gould, chairman and chief executive of Bloomingdale’s. He characterized fashion accessories, costume jewelry, shoes and the trim business as the stronger categories. Among the biggest surprises, men’s wear posted its best week of the entire fall season, Gould said. Bloomingdale’s parent, Federated, said that for the corporation, overall sales were weaker in the second week of December and the forecast for comp- store sales for the month is still for a negative 11-14 percent, and for the combined November-December period, down 7 to 10 percent.
Business at the Jeffrey stores in New York and Atlanta was “beyond my expectations and better than last year,” said owner Jeffrey Kalinsky. The Atlanta store had its strongest Sunday ever, according to Kalinsky.
He did acknowledge that his stores are offering 50 percent discounts, just like last year, and that’s helping to move the goods. However, he said he has been noticing strong selling on new, regular-priced merchandise as well. His New York inventory is below last year’s, while in Atlanta, the inventory is about the same, but business there is better, said Kalinsky.
At Canal Jeans in SoHo, “the weekend was sensational,” said Neal Leavitt, general merchandise manager. “We exceeded both our forecast and last year for the weekend. For us, that’s a major turnaround because our plight down here between the events following Sept. 11, the economy, the lack of tourism and the mild weather has created a lot of problems for us.
“It appears that the customers were out with a vengeance, and we were forced to make our merchandise the right price obviously to move it, but they responded to the tremendous values that we offered them. We’re delighted that while it will have been a very challenging fall season, at least we can end on a much more positive note so that we can be ready for what will be a challenging spring season.”
The store’s promotional sale slashed prices 20 to 70 percent. “We also have a lot of merchandise that is 20 to 50 percent off on the branded products that are seasonal goods. We just moved our markdowns up by four to six weeks so we could move the goods out,” said Leavitt. Also, inventory is in line, on or below the forecast.
“Going into spring, the first quarter will be very challenging without the tourist base, it will hurt us in those months,” Leavitt predicted. “We’re going to be very cautious and take a very conservative approach to the business.”
Kohl’s, among the heaviest of promoters, continues to get good response to special events revolving around price cuts, including last weekend’s “Great One” event, which was supported by a 20-page circular. Wednesday events that offer an additional 15 percent off to seniors have also been successful, along with category promotions, such as 60 percent off diamond jewelry. Outerwear, particularly the Columbia brand, and fashion jewelry have been the best categories for Kohl’s, said the spokesman.
General Growth Properties, the Chicago-based developer which owns 95 malls and manages another 46, said traffic was generally flat over the weekend. Stores selling electronics and games such as the Microsoft X-Box did well, along with music-entertainment stores, such as Sam Goody’s that offers popular new DVD titles. Victoria’s Secret and Gymboree also had a good weekend, in traffic and sales, said a General Growth Properties spokeswoman.
However, Karen Macdonald, communications director for Taubman Cos., another major mall developer, said “This weekend was one of the strongest that we’ve seen.” One of its centers, Dolphin Mall in Miami saw an over 9 percent increase in visitors from the week before, according to its traffic count, and was 23.1 percent from the first weekend of the holiday season. “If sales continue, many store managers should come out better than anticipated,” Macdonald said.
Selling best at the Taubman properties, which are merchandised for more affluent consumers, are gift certificates, jewelry, home goods, toys and electronics. Apparel did better last week, though outerwear is still weak.
J.C. Penney Co. reported department store sales last week were “strong,” based on its conservative plan for a low-single-digit gain. However, the catalog maintained its plan for a 20 percent drop, while Eckerd drugstores fell below the plan for a high-single-digit gain due to a slow start to the flu season, according to the company.
The home category led Penney’s stores with especially good business in towels and housewares. Men’s apparel ranked second and women’s merchandise was third, and according to the company did well across a broad range of departments.
A spokeswoman for Elder-Beerman Stores Corp. said the retailer was pleased it made plan last week. The home and women’s businesses both were strong, particularly special sizes. “We had a good sales week and I would say that except for winter coats and warmwear every other category did pretty well,” she noted.
Neiman Marcus, which has experienced a difficult year, reported that it met its adjusted seasonal plan for the second consecutive week and is encouraged by brisk business in new receipts for early spring. “It’s nice to see the customers responding to the new goods,” Ken Downing, a spokesman, noted. “We’re on track to where we want to be.”
For resort, customers have been drawn to items in luxurious fabrics, such as lightweight cashmere and “anything with color, novelty or prints,” he said. Sandals continue to perform well, and the new Prada loafer has been hot. Burberry has been popular for gift-giving, including belts, hats, scarves and dog and cat bowls. Sunglasses are selling well as gifts and self purchases.
Others also sounded a more upbeat tone. Jim Famalette, ceo of Fresno, Calif.-based Gottschalks, said, “We saw some good business almost all week and Saturday was a very strong day.”
And Jill Brand Marker, an assistant at the Baby & Co. designer boutique in Seattle, said business has been “a little healthier” this year compared with last year, because consumers are traveling less and are therefore able to support local retailers more.
Traffic was “very heavy” over the weekend at Macy’s West, according to women’s fashion director Durand Guion. Departments that seem to be getting the most attention are accessories, juniors, leathers, and private label I.N.C. shops.
“Women are buying anything that looks special,” he said. “It can’t have enough ruffles. It can’t have enough lace. It can’t have enough embellishment. If it’s beaded, or sequined or any combination of that it’s working throughout the store.”

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