Retailers Count on Big Weekend to Save Season
If only Magic Johnson could sell refrigerators. With the holiday shopping season winding down to its final weekend, many retailers need a clutch performance to pull off a winning Christmas.
Analysts expect sales gains of 5% to 8% for the season. Profits, however, have been squeezed by the sharp markdowns being offered to bring more customers into the stores.
Still, a strong showing in the last few days could swing some companies’ bottom lines “from mediocre to good,” said Irving J. Weintraub, the Los Angeles director of retail services for the Deloitte & Touche accounting firm.
“The last week is critical,” added Craig Gordon, head of Grassroots Research in San Francisco. “A larger and larger group of people are making last-minute purchases because time has become more precious with more two-income families.”
Last year, a final-weekend surge gave retailers a healthy profit gain and lifted general merchandise sales increases to nearly 9% over those of the previous year. Until then, it had seemed like a mediocre season.
This weekend’s sales could have added importance for some of the nation’s weaker retail concerns, particularly Campeau Corp. The Toronto-based company, which last week disclosed a widened loss of $186 million for its third quarter, has said it might seek bankruptcy court protection for its Federated Department Stores and Allied Stores divisions as soon as late January.
Traditionally, about 50% of the annual profits at Campeau’s department stores and other major retail chains come in the quarter that includes Christmas.
Among the other major department store operators hoping for a boost from the holiday shopping season is R. H. Macy & Co., parent of the Bullock’s, I. Magnin and Bullocks Wilshire chains in Southern California. This month it reported a first-quarter loss of $33.1 million. In November, Carter Hawley Hale Stores, the Los Angeles-based parent of the Broadway department stores, posted a loss of $13.9 million for its first quarter.
Some analysts expect the markdowns that consumers have seen for the past two months to get even steeper over the final weekend of Christmas shopping. “The reality is that there is a lot of merchandise on the floors of the stores, and if you want to get people to buy it now, you’ve got to lower prices,” Weintraub said.
Others said, however, that most retailers don’t appear to have gotten desperate to drum up business. Consequently, they said, consumers generally won’t see across-the-board price cuts in the 50% range until after Christmas, if at all.
Retailers’ relatively ample inventories, analysts said, should mean that customers will still have a fairly good selection of merchandise. “There will be hot items that are missing, but people generally should be able to find what they want,” said Elizabeth A. Armstrong of Johnson Redbook Service.
Although the final word is yet to be written on retailers’ profits, the hit products already have emerged. According to a nationwide survey of 422 stores by Grassroots Research, the hot sellers at department stores have been turtlenecks and other types of sweaters, leather jackets and denim and fleece clothing.
Other big sellers have been electronic games, VCRs and video cameras, or camcorders. Large appliances, on the other hand, have moved slowly.
At the discounters, Grassroots found, such items as the Teenage Mutant Ninja Turtle action figures, Nintendo video game products and such classic dolls as Barbie and G.I. Joe have led the way. On the other hand, the Pee Wee Herman line of clothing and the Donald Trump board game are going nowhere.
Grassroots reported that specialty stores have sold lots of leather bomber jackets, Rock’n Flowers and sweaters, but that sweat suits and clothing in neon colors have fared poorly.
Generally speaking, analysts said, consumers have been spending cautiously, looking hard for bargains.
