The Web worked its wonders on retail shares Wednesday.
Shares soared on news that Cyber Monday sales were much higher than anticipated, rising 15 percent over the previous year to $846 million, according to comScore Inc. It was the second largest day of shopping online ever, after “Green Monday” in 2007, or the second Monday after Black Friday.
The buoyancy of Web sales on Monday came as a surprise because e-commerce revenues had been down 4 percent before Thanksgiving, even though the number of transactions had been growing.
As a result, retail shares roared back for a second day Wednesday, regaining the rest of the ground lost in Monday’s record-breaking 9.3 percent plunge. The Standard & Poor’s Retail Index perked up 6.3 percent, or 15.54 points, to 262.90, and handily outperformed the market overall as the Dow Jones Industrial Average rose 172.60 points, or 2.1 percent, to 8,591.69.
Some Web players joined in the rally, including Amazon.com Inc., up 9.8 percent to $45.21; Blue Nile Inc., 6.5 percent to $24.56; Overstock.com Inc., 3.3 percent to $10, and eBay Inc., 2.8 percent to $13.63. However, Bluefly Inc.’s shares hit a new 52-week low and traded down 27.9 percent to $1.
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Among the retail gainers were some brick-and-mortar chains that also have significant online presences, such as J.C. Penney Co. Inc., up 6.4 percent to $18.50, and Macy’s Inc., 5.6 percent to $7.39.
In a retail season unlike any other, the news about Cyber Monday was especially welcome, although executives hesitated to draw any conclusions for the rest of the season.
“If there are more great days like this, that would be fantastic,” said analyst Sucharita Mulpuru of Forrester Research Inc. “People have been holding back on spending and waiting for sales. This is bright news in lean times.”
At Bluefly, sweaters, accessories, outerwear and denim were the most popular categories. “We had a very strong Cyber Monday,” said chief executive officer Melissa Payner. “It was actually the biggest day in our history, which is really interesting. The problem with that is this kind of economy and this cycle we’re going through is not predictive. We’re not seeing every day the same sort of growth, it’s an up-and-down kind of business.”
Shoppers may have turned out in droves because of all the publicity surrounding the discounts that day, she said.
Online revenues have climbed significantly since Thanksgiving, and are up 12 percent compared with last year. However, earlier in the season consumers were holding back, so for the period from Nov. 1 to Monday, online sales are down 2 percent to $12 billion. Shoppers probably procrastinated more than usual because of unprecedented bad economic news, and then started to spend once December arrived, said executives. Forrester has not restated its October forecast of 12 percent growth over the holiday period, although that may turn out to be a little high, Mulpuru said.
Sales at Zappos have been strong since Thanksgiving, and Monday was its biggest day for gross merchandise revenues ever, said vice president of merchandising Steve Hill. “We’ve been experiencing double-digit increases over last year every day since Thanksgiving, and Cyber Monday was the largest day in the history of Zappos,” he said. “Ugg continues to do very well for us, and The North Face, both footwear and apparel, has been very strong. We’re also experiencing strong sales in the boot category.”
Boots were also big sellers at Zappos competitor Endless, which experienced a strong Monday and holiday weekend, as did parent company Amazon. “We were really, really pleased,” said an Amazon spokeswoman, referring to traffic and sales Monday on both sites. “Diamonds and boots were two categories that did especially well.
“Diamonds were a really big surprise to us considering how the economy was going,” she said. The company offered 30 to 45 percent off all categories of diamond jewelry, from earrings to engagement rings to bracelets. She declined to speculate on the rest of the season, but said “we expect customers to come back and keep shopping with us.”
While the season has been incredibly promotional, with retailers across the board offering deep discounts well before Thanksgiving, Net-a-porter.com did very well on Monday despite a big sale worldwide.
“Sales on Monday were strong and up on last year by 30 percent,” said Net-a-porter vice president of sales and marketing Alison Loehnis. “Our sale started well in the U.S. last week, and thanks to a strong fall selling season, we did not need to be very aggressive with our markdowns. As ever, we continue to focus on full-price sales. Our customers are early adopters and are always looking for newness and the latest ‘must-have’ products and designers. We see this daily (and hourly) through robust new product sales across all categories, with cruise performing particularly well for us at present.”
EBay had a “pretty good day” Monday, said eBay marketplace expert Jim Griffith. “Overall e-commerce did well, and we did the same,” he said. EBay company PayPal, which handles online payment transactions, saw a 27 percent increase in payment volume versus last year. “That indicates a pretty good spike for us,” he said.
Amazon, Wal-Mart, Target, BestBuy and Sears were the top most-visited of 500 retail sites on Monday, according to Hitwise.
Cyber Monday is rarely the biggest day for holiday sales online, but rather begins the season of spending online. Typically, after Cyber Monday, online sales peak in the middle of the week — when people are at work or home rather than out shopping in physical stores — every week leading up until Christmas, Mulpuru said. Bluefly sees the same patterns, Payner said, although eBay said it has found that the second Monday after Black Friday is usually its busiest sales day. “This week is interesting because people can shop through the weekend and still get their gift because Christmas is not until Thursday,” Payner said.
“Retailers could be overreacting” by offering such extreme discounts, she said, “but I think the thought is to get sales when they can. Everyone’s trying to take share in this market.”
Despite the good news for online sales, all is not well in retail.
American Research Group revised its annual holiday sales forecast to a decline of 3.5 percent, down from the 1 percent drop predicted in mid-November. Standard & Poor’s debt and equity analysts also continued to slice and dice the sectors’ prospects and decided on further downgrades.
S&P lowered its credit rating on Saks Inc. to “B” from “BB-minus,” and said it anticipates a weak fourth quarter for the company. “Credit measures deteriorated significantly in the third quarter and are not likely to begin recovering until the second half of 2009,” said credit analyst Diane Shand.
The ratings agency also moved Finlay Enterprises Inc.’s corporate credit rating down to “SD,” or selective default, from “CC.” The downgrade came after the company said it received consent and waivers with respect to $162.8 million in debt to exchange outstanding senior notes. S&P described the move as a “distressed exchange.”
On the equity side, S&P downgraded shares of Nordstrom Inc. to “sell” from “hold.” Equity analyst Jason Asaeda wrote, “We view the company’s ongoing focus on full-price selling as a significant negative in a highly promotional retail environment.”