Late Buying Surge Brings Little Cheer for Retailers

A last-minute surge in Christmas buying was not enough to significantly boost holiday sales for retailers in San Diego and other parts of the nation, as merchants reported a disappointing season Thursday despite deep discounts that did little to attract recession-wary shoppers.

The sluggish results give further indication that consumers are not ready to lead the ailing economy to a recovery. This was the third successive dismal holiday shopping season and could lead to further financial difficulties for a number of retailers. Although shoppers were out in force, they shunned costly items and stuck to practical goods.

“We’re well down from last year, which in itself was disappointing,” said William Keller, owner of Le Travel Store travel accessories and luggage shop in San Diego’s Horton Plaza shopping mall. “Last year, people were afraid that war was going to break out and what the consequences might be. This year, it’s general nervousness about whether people are going to have a job or not.”

The picture for some chains was particularly painful in California, where the recession was late in coming and shows no signs of leaving soon. Mervyn’s, for example, reported that sales in the state fell at a greater rate than in the rest of the country.

Members of the National Retail Federation, the leading trade group for large chains, reported 3% growth at best for November and December over results in 1990. Such a showing is actually very poor, because 1990 was a bad year and the numbers are not adjusted for inflation, said Jack Schultz, federation president. Actual December sales figures will not be reported until late next week.

“It was awful,” said Edward Weller, an analyst with Montgomery Securities, a San Francisco investment firm. “Retailers’ expectations fell day by day as the season unfolded, and those expectations were met.”

Deep discounts on prices didn’t seem to work any magic for retailers. Bert Levi, a partner in Ed Levi & Sons Jewelers in San Diego, said his business is off 30% from last year, despite slashing prices by as much as 60% in a bid to attract buyers. Levi said buyers’ reluctance to extend themselves on credit was at the heart of his slow sales.

“People are afraid to go out on loans too much. They are looking for good bargains, for much less expensive gifts,” Levi said.

“I don’t think anybody is jumping up and down about this holiday season,” said Robert Buzard, a consultant at D. Laurenti, a pricey men’s store where a red-and-black “SALE” sign hung across the width of the Glendale Galleria shop. “If we can make last year’s figures, I think we would consider ourselves fortunate.”

Shoppers leaned toward the practical and low-priced this season, retailers said.

At the Sport Chalet sporting goods outlet in Oxnard, items that sold well among price-conscious shoppers included Ping-Pong tables, lawn games and exercise equipment, “traditional family things that more than one person could use,” said store manager Martin Rumpf.

Gerry Fullington, manager of Adventure 16, a downtown San Diego store specializing in outdoor clothing and accessories, said his store sold an unusually high volume of lower-priced gift items such as incense, nature tapes and woodpecker door knockers that almost made up for the low demand for higher priced items.

Fullington was one of a handful of San Diego merchants who said they considered it a major accomplishment that they were able to equal last year’s Christmas season sales. “We did real good to come out even with last year. We bought less inventory and trimmed our budget, anticipating lower sales, but our sales were better than we expected.”

Pricey items often went begging. “We didn’t see strong numbers in the ski hardware department,” said Rumpf, who credited a last-minute surge of Christmas shoppers to enable the store to at least match last year holiday results. San Diego jeweler Levi said buyers this year were apt to choose “colored stones and gold chains over diamonds.”

The mood of shoppers is “more conservative, and (they are) not spending as much,” said Janet Storton, owner of Storton’s Men’s Fashion Theater, an upscale men’s clothing store at San Diego’s Horton Plaza shopping mall.

Customers who “normally spent $500 would spend half that, just to be on the conservative side,” Storton said.

The season also proved disappointing in other parts of the nation.

“Terrible--off 40%,” said Nitzo Levy, manager of Ritz Cameras & Electronics Inc. on Manhattan’s East Side. “I think a lot of people are owing a lot of money. They can’t use their credit cards anymore. Nobody was ready to spend big.”

Sale items were definitely a draw for Chicago shoppers Michael Worosz and his family, who drove 30 miles from their home in Indiana. “Prices are pretty steep,” said Worosz. “Unless (items) are on sale, we don’t buy. They do go on sale eventually.”

“We were disappointed with Christmas,” said Stephen E. Watson, president of Minneapolis-based Dayton Hudson Corp., which owns Mervyn’s and Target stores. “We really expected we’d do five to seven percentage points better than we did.”

Mervyn’s, a department store carrying moderately priced clothing and housewares, saw sales tumble in the 15 states where it operates, with its 109 California outlets reporting declines “in the double digits,” Watson said. California, where the economy has been plagued by massive layoffs at defense and aerospace companies, accounts for 60% of Mervyn’s sales.

The company’s Target discount chain turned in the best performance, with sales gains “well into single digits.” But Watson said the company is forecasting very little improvement in the near term. “We’re expecting the first half (of 1992) to be pretty difficult.”

With shoppers focusing on functional, moderately priced gifts, the climate was right for stores such as Target, Wal-Mart, the huge discounter based in Bentonville, Ark., and the Gap, a San Bruno-based merchant of practical casual wear.

Kmart Corp., based in Troy, Mich., said its 2,254 U.S. stores experienced a cheering sales surge at the tail end of the season, with jewelry, small appliances and basic toys proving most popular.

“We had a sensational last two days prior to Christmas,” said spokesman Orren Knauer. The boost was enough to help overall sales shoot up a respectable 8% to 9%, Knauer added, although stores open at least a year probably will report gains in the “mid-single digits.”

At Sears, Roebuck & Co.’s 868 stores nationwide, the season finished as it had begun, with a strong burst. But sales in between were weak, spokesman Perry Chlan said.

“We expected holiday shopping to be late and value-oriented, and it was,” Chlan said, adding that sales on Monday surpassed those of the day after Thanksgiving, the traditional kickoff for the holiday season.

R.H. Macy & Co., which owns Macy’s, Bullock’s and I. Magnin, declined to be specific, but spokesman Jim Fingeroth in New York said business “was about even with last year’s season.” The company recently reported a steep loss and, like many other retailers, has been troubled by high debt.

Some retailers and manufacturers also remained conservative, keeping expectations and inventories low.

Jodi Duesterhaus, manager of the Imaginarium toy store at MainPlace Shopping Center in Santa Ana, said many customers could not find several popular items the week before Christmas because “certain manufacturers were playing it cautious. Then, when the demand hit, we couldn’t get merchandise fast enough.”

In San Diego, Levi does not foresee much improvement in his business or the economy in 1992.

“People are getting laid off every day,” said Levi. “Another Christmas will come and go and then it will pick up.”

“People don’t have money. They’re either fired or they got no bonus,” said David Saatchi, manager of Farid’s, a New York jewelry store where sales are running at about half of last year’s level.

“And it’s going to get worse and worse,” said Saatchi. “If things don’t turn around soon, we’ll probably have to close the store.”

Contributing to this story were Times staff writers Chris Kraul in San Diego, James Peltz in Los Angeles and Victor F. Zonana in New York, free-lance writer Anne Michaud in Orange County and Times researchers Tracy Shryer in Chicago and Ann Rovin in Denver.