A surge of last-minute shopping may have given the nation’s retailers and the economy a small boost, according to several reports on holiday sales released yesterday, The New York Times reported Thursday.
The 11th-hour sales gains will not add much to retailers’ profits because most of the increases were bought with dizzying price cuts like 70% off gold and diamond jewelry at Kmart and 75 percent off sweaters at Neiman Marcus. Still, several economists said the deep discounts that moved merchandise out of the stores could be good for the overall economy.
“The key issue this Christmas was whether retailers were going to be able to empty their shelves of inventory so that they would be in position to start ordering from the factory again,” Carl Steidtmann, chief economist at Deloitte Research, who specializes in consumer spending, told the Times. “The silver lining of this Christmas is they were able to accomplish that through very aggressive discounting.”
Nonautomotive retailing accounts for a little more than a quarter of the country’s gross domestic product, Mr. Steidtmann said.
Some New York area retailers found it hard to lure many shoppers to spend heavily on the first day of post-holiday sales.
Still, nationwide, pre-Christmas sales in stores open at least a year rose 2.2% over 2000, according to TeleCheck Services Inc., which publishes one of several holiday spending indexes. That was the smallest increase since 1997, but it included positive results for a number of merchants, the Times reported. Wal-Mart Stores, the nation’s largest retailer, said sales had increased around 6%, at the high end of its predicted range, and other discounters also reported strong growth. Department stores did not fare as well, but their results were no worse than analysts had been expecting. Several Internet retailers reported solid sales gains.
But there were far too few procrastinating purchasers to make this a glowing season. Unseasonably warm weather and a general malaise after the terrorist attacks of Sept. 11 kept many shoppers out of stores for the first three weeks after Thanksgiving, and many industry experts still believe that when all is said and done, holiday sales at major retail chains will not rise much more than 1% over last year, the Times reported.
But clearly, enough consumers went to the mall to make a difference in the final tally.
“The last four days were especially strong in the context of the recession,” said Dr. William Ford, the senior adviser to TeleCheck Services Inc. “The last week had to be up by more than 3%.”
The TeleCheck Retail Index is based on a year-over-year comparison of the dollar value and the number of checks written by consumers at 27,000 stores. Because the TeleCheck index includes sales at a huge variety of stores, including mom- and-pop operations, its results sometimes differ from indexes measuring only chain store sales.
In fact, other summations of holiday sales published yesterday were noticeably less optimistic. Redbook Research, which focuses more heavily on apparel retailers, said seasonally adjusted sales for the first three weeks of December, through last Saturday, were down 0.6% from the comparable period in 2000, the Times reported.
Still, everyone seemed to agree that last-minute shopping, particularly on Christmas Eve, helped the picture a lot.
Discounters like Target and Wal- Mart, which dominated the holiday selling season as usual, were perhaps the greatest recipients of last- minute consumer largess, the Times reported. Wal-Mart said busy stores over the four-day weekend would contribute to healthy 6% sales growth and protect its profit margins. The company also said it had actually run counter to the rest of the country and put fewer items on sale this year than last.
Department stores, as expected, fared far worse than the discounters. Still, the weekend flood of customers helped many stores contain losses, the Times reported. Federated Department Stores, the parent company of chains including Macy’s, Bloomingdale’s and Burdines, reported yesterday that sales were on track to decline 7 to 10% for the combined months of November and December. Sears, Roebuck predicted that it would see sales declines in the low single digits.
Those results came at a price, however, as retailers had to dramatically slash prices to get shoppers’ attention in a highly promotional season. Along the nation’s great shopping thoroughfares, sale signs were more common than American flags.
While customers reveled in the steep discounts, the lower prices will certainly affect profits come January.
“Despite the fact that sales increased, you are not going to see earnings rise,” Richard Church, a retail stock analyst with Salomon Smith Barney told the Times. “Mostly you are seeing retailers empty the shelves of inventory so they are positioned properly for the upcoming year.”
Several of the biggest Internet retailers had strong seasons. Although there has been a draconian winnowing among Internet merchants the last 18 months, the survivors are reaping the rewards of a small but still growing segment, the Times reported. Yahoo said shopping sales made through its site rose 86% this holiday season, but that number was inflated because Yahoo added several new merchants to its site in the last year, including Wal-Mart.com and AnnTaylor.com.
Dealtime.com, a price search engine, saw traffic double and revenues soar compared with last year as consumers logged on to search for popular items like digital cameras, the Times reported. Amazon.com, the Web’s largest merchant, will not report sales numbers until it has figures for the whole month.
The pre-Christmas sales do not tell the whole picture. Many retailers count on the days after the holiday to bolster their monthly sales figures. Now, retailers just have to hope the returns are light and the coat sales are heavy.