Major chain stores post 3.1% sales gain in November
Deep discounts, promotions and early store openings during the Black Friday weekend got national retailers off to a solid start in their crucial holiday season.
Sales at major chain stores posted a 3.1% gain in November compared with the same month last year, according to a Thomson Reuters’ tally of 21 large retailers released Thursday. The results met Wall Street expectations and were bolstered by record numbers of people out buying on the days after Thanksgiving.
“Generally speaking it was a pretty good month,” said Ken Perkins of research firm Retail Metrics Inc. “Black Friday was very good, and the rest of the month was more ho-hum. It looks to be a decent holiday shopping season so far.”
Analysts are now focused on December, the second half of the make-or-break season when retailers often rake in 25% to 40% of their annual sales. A good holiday season could speed up the nation’s tepid recovery because consumer spending accounts for nearly 70% of U.S. economic activity.
At stores festooned with lights, wreaths and workers in Santa hats, many consumers said they were planning to splurge a little on friends and families — as long as there were good bargains to be had.
Jaime Garcia, 27, of Santa Barbara was browsing for toys for his two sons Wednesday at Santa Monica Place mall, accompanied by with his girlfriend, Rochelle Rodriguez, 23. After landing a stable cafeteria job at UC Santa Barbara two months ago, Garcia said he planned to increase his holiday spending by a few hundred dollars over last year.
“I’m just feeling better about where I am this year, and I’m feeling good about keeping this job,” Garcia said, giving Rodriguez a squeeze. “This is also our first Christmas together, so there are more people to buy for.”
Top performers reflected a mix of expensive and discount stores. Costco Wholesale Corp. said sales rose 9% as penny-pinching consumers continued to shop for discounts. Some luxury retailers also posted healthy sales, with Saks Inc. reporting a 9.3% increase and Nordstrom seeing a 5.6% bump.
Other chains did not fare as well. Despite opening at midnight on Thanksgiving for the first time ever, Kohl’s reported a 6.2% decline. Struggling Gap Inc., which announced plans in October to close 20% of its U.S. stores, dropped 5%. J.C. Penney, which did not open on Thanksgiving, said its sales fell 2% compared with last November.
The “decision to respect Thanksgiving Day for families and open at 4 a.m. on Friday … adversely impacted Black Friday sales,” J.C. Penney said in a statement Thursday. “Sales remained soft in-store throughout the holiday weekend.”
November’s revenue performance was based on sales at stores open at least a year. Known as same-store sales, the figures are an important measure of retailers’ health because they exclude the effect of new shops and closings.
The results underscore a yawning divide between wealthy shoppers and consumers hurt by high unemployment and other financial worries, industry analysts said.
“You are seeing two different economies, two sets of consumers,” said James Rushing, a partner in the retail practice at A.T. Kearney. “Higher-end shoppers have the ability to shop, while a great portion of the economy is still struggling and retailers who typically appeal to them don’t do as well.”
Earlier-than-ever openings on Black Friday weekend and heavy promotions lured shoppers into the malls last month, analysts said. But mild weather in many parts of the country damped sales of cold-weather apparel during the first weeks of November.
Shoppers shelled out $52.4 billion from Thanksgiving through Sunday, a 16.4% surge over $45 billion from the same period last year, the National Retail Federation said.
But industry watchers worry that momentum will sputter as shoppers quickly burn through their holiday budgets and then stay home to avoid temptation.
Perkins of Retail Metrics said he feared that Black Friday was an “anomaly” fueled by huge hype, blockbuster discounts and extensive media coverage. After that nationwide shopping binge, he predicts a “significant lull from now till the 17th of December, when things get ramped up again in terms of heavy promotions.”
Many experts predict that retailers are on track for a decent but not great holiday season. Competitive pricing, free shipping and good bargains will all be on display as chains jockey for dollars.
“People are still drawn to good value, and consumers are now trained to expect it,” Rushing said.
That said, many people weary of being thrifty over the last year will probably drop money for small indulgences during the holidays, said Judith Russell, editor of the Robin Report, a retail industry publication.
“They are sick of being frugal and sick of not having anything new,” Russell said. “Unemployment has probably also bottomed out, and people are becoming a little immune to stock market volatility. They want to enjoy themselves.”
That’s exactly what Annie Kimball, 30, had in mind while shopping for sweaters and accessories for herself at Santa Monica Place this week. The elementary school teacher, who runs a event-planning business on the side, plans to double her holiday spending to $1,000 this year.
“My business is taking off and I have a good full-time job, which is a nice change from working in retail,” the Santa Monica resident said. “So am I going to treat myself? Definitely. It’s Christmas.”
