Retailers’ December seen as among the worst in 40 years
Just how grim was the Christmas season for the nation’s retailers? The bad news comes today -- at least officially -- when major chain stores report December sales figures.
If preliminary estimates are correct, the holiday season will go down as one of the worst in 40 years.
“Only good thing to say about December is that it’s over,” said Brian Tunick, a JPMorgan retail analyst, in a report this week.
But with little reason for consumers to spend in the post-holiday period and an excess of clearance inventory on the shelves, January could deliver yet another blow to struggling retailers.
At the Westfield Century City mall Tuesday there were big markdowns on items such as designer purses, jewelry and apparel, but for shopper Christine Ferreira it still wasn’t enough.
“Even at 50% off, they’re way beyond what I can afford,” said Ferreira, 46, an assistant elementary school principal from Culver City. She and her husband came to the mall just to redeem about $50 worth of gift cards at a store they worried could fail.
“My understanding is if you have a gift card and the store goes bankrupt, you’re at the end of the line to get your money back,” she said.
Nearly every retail category -- including apparel, department stores and youth-oriented chains -- is expected to post significant December same-store sales decreases compared with a year earlier, according to Thomson Reuters estimates.
Among apparel chains, Gap Inc. is expected to report a 9.3% decline in December compared with a year earlier. At Abercrombie & Fitch Co., which has refused to engage in widespread price-slashing, analysts are predicting a whopping 23.5% sales decline.
Luxury stores are again expected to suffer heavily. According to estimates, Nordstrom Inc. will post a 13% sales decrease in December compared with a year earlier, and Saks Inc. will show a 10% decrease.
Wal-Mart Stores Inc. will probably be one of the only stores to do well. The discount giant is expected to report a 2.8% sales increase in December compared with the year-earlier period.
All told, the 35 chain stores that Thomson Reuters tracks are forecast to post a combined 1% sales decrease. Excluding Wal-Mart, that figure worsens to a 4.8% estimated decline, the information company said.
So far, many retailers have been vague about their strategies for the new year, except to say that prices will remain low without sacrificing quality.
“We’re a promotional department store, so our promotional cadence remains unchanged,” said Rebecca Winter, a spokeswoman for J.C. Penney Co., which is expected to post a 10.3% year-over-year decline in December sales.
Besides more markdowns, merchants will have to close locations, delay store openings and scale back inventories, retail professionals said.
“In this world, it’s all about the balance sheet,” said Todd Slater, an analyst with Lazard Capital Markets. “Retailers are focused on surviving and playing defense, and those that survive will emerge healthier and wealthier.”
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