HOLIDAY COUNTDOWN: SPRING-LIKE WEATHER ADDS TO RETAIL CLOUD
Byline: David Moin / With contributions from Anamaria Wilson, New York / Kristin Young, Los Angeles / Holly Haber, Dallas / Georgia Lee, Atlanta.
NEW YORK — After squeaking by Black Friday, retailing became even tougher last week.
While retail lulls are typical after Thanksgiving weekend, store executives on Monday sounded more disappointed than in recent years. They’re expecting a late Christmas surge — no surprise there. But given all the dire forecasts and factors figuring against them and the pattern of business so far, it will take a huge one to lift stores out of the hole. Just how deep they dug themselves will not be really evident until retailers report their yearend profits next spring.
Such major retailers as Macy’s and Bloomingdale’s reported missed plans last week, even though the impact of the recession and low tourism were built into the planning. Chico’s said the pace slowed compared to the prior week, while J.C. Penney was happy with its sales results vis a vis its conservative plan.
Some higher-priced boutiques, like Salvatore Ferragamo and Kirna Zabete, saw improvement, and reports from a few regional malls corroborated that the high-end traffic was good, while mainstream retailing was generally flat.
“Business was fine until we got to the weekend,” said Hal Kahn, chairman and chief executive of Macy’s East. “Christmas will come later, but we need some good cold weather. It will be tough this week.”
Kahn said the cold weather-related business at Macy’s is running 30 to 40 percent behind. “You can’t give a coat away, and that’s a real problem that becomes bigger everyday as it gets later and later into the season and you have to dispose of the goods,” said retail analyst Walter Loeb. “For many stores, the Northeast is particularly difficult,” though he said a few stores did see some pickup over the weekend.
Generally, last week’s spring-like temperatures and more bad international news kept consumers out of the holiday spirit and reluctant to hit the malls. The recession, ongoing job insecurities and anemic tourist traffic are further depressing the will to spend.
The International Council of Shopping Centers said Monday that compared to last year, sales at specialty stores in the nation’s malls fell 2.6 percent in the first full shopping week of the holiday season. Among the steepest declines, apparel, 4.6 percent, and jewelry, 4.5 percent. Significant increases were seen in music, video and home entertainment, which rose 5 percent. The report includes sales results from 4,000 specialty stores in 80 regional malls.
Still, Bear, Stearns equity analyst Dana Telsey said Monday that she anticipates holiday sales to grow by 1 to 3 percent this year due to the extra day in the selling season — 32 compared to 31 last year — and the aggressive holiday promotions. She noted last time there were 32 days in the season was in 1990, when holiday sales rose 2.9 percent on a comp basis.
But this year’s promotions are steeper, and could get even more intense. “We are in a lull now and I do not expect a pick-up until a week before Christmas,” she said.
“When it’s 79 degrees in Washington and 69 in New York, and very, very few tourists are here, that’s a colossal issue,” stated Michael Gould, chairman and ceo of Bloomingdale’s. He said Bloomingdale’s ran below plan for the week, but was a tad up against last year. He also cited a few pockets of strength, particularly where there’s a stronger fashion component, such as in women’s boots and Young East Sider.
Penney’s reported sales at department stores were “strong” on the basis of a low single-digit sales gain planned for the month. The best categories were home furnishings, men’s and women’s accessories, especially handbags. The catalog, which is being revamped for spring, was on plan for a 20 percent sales decline this month. Elder-Beerman Stores, based in Dayton, Ohio, continued to feel warm weather crimp sales of coats, sweaters, gloves and scarves. Jewelry has been a popular gift category, though sales of patriotic-themed merchandise has slowed a bit.
At Chico’s, traffic and sales were up Saturday over the prior Saturday, but weekend performance overall was less than the post-Thanksgiving weekend.
Chico’s comp sales were up and sales are meeting plan, according to Pat Murphy, senior vice president and general merchandise manager. Murphy said that special holiday items, such as velvet separates, along with shiny fabrics and details, had performed best. Although bestsellers are dressy, they are relaxed and casual, for home entertaining and parties.
Massimo Ferragamo, president and vice chairman of Salvatore Ferragamo USA, said “last week was a very good week, with 5 to 15 percent increases.”
Weekend traffic at Aventura Mall in North Miami Beach, was flat, according to a spokeswoman. Department stores continued to lure customers with major sales, but national chains emphasized trendy merchandise rather than markdowns.
However, traffic picked up last week at Highland Park Village in Dallas, a luxury shopping center where tenants include Calvin Klein, Chanel, Escada and Hermes. “It was as busy as I’ve ever seen it,” said Henry S. Miller 3rd, president of Henry S. Miller Interests, which owns and operates the center. November sales were up about 12 percent over October, but that was roughly even with the same month last year, which was strong, he noted.
On the West Coast sales significantly softened.
“It hasn’t been as vibrant a season as it was last year,” noted Oren Hayun, principal of Los Angeles-based young contemporary chain Planet Funk with nine mall-based stores in Southern California. Hayun noted that he lowered holiday projections based on the tepid climate and, to date, stores have reached those projections.
Tops, T-shirts and denim are still driving most of the business, accounting for between 60 and 70 percent of total sales. Sweaters are beginning to pick up, encouraged by cooler weather and rain in the region. Sales of skirts, dress pants, dresses and coats are still weak.
Frederick’s of Hollywood began the season robustly over Thanksgiving weekend, but the rest of last week was soft, according to ceo Linda LoRe.
Echoing other retailers, sales of anything one might wear at home, including pajamas, teddies, and sexy nightwear, has been “very good” at Frederick’s.
“The whole increase in marriage after what’s happened bodes well for our sexy wear category,” said LoRe. “Ready-to-wear, particularly dressy wear, is not doing anything near what it has done the last few years.”
In SoHo, Kirna Zabete was crowded Saturday, marking “the first busy day of the season,” said Sarah Hailes, co-owner. Most of what customers were snapping up were dresses, holiday outfits and jewelry. But the warm weather took a toll. “Normally, right now I’m selling mittens and gloves and hats and scarves. Instead I’m selling cosmetics bags, underpants, candles and T-shirts,” said Hailes.
To broaden their customer base and offer less expensive merchandise in a struggling economy, Hailes and her partner Beth Buccini have increased gift items priced under $100, in a store rife with $900 cashmere sweaters and $600 Jimmy Choo boots.
At the Yves Saint Laurent boutique on Madison Avenue, sales have picked up since Thanksgiving. The cruise group and new spring handbags are selling very well, particularly the Mombassa bag, which retails for $695 to $795.