Apparel Sales Cooled by Warm Weather
With seven days remaining on the holiday shopping calendar, retailers are slashing prices to boost apparel sales that have been hurt by warm weather throughout most of the country.
While chilly and windy weather whipped up demand for sweaters and jackets and other clothing in Southern California during the first weeks of December, unseasonably warm weather in the East and Midwest has caused consumers to pass up knits and overcoats or postpone shopping for leisurely outings.
Consequently, holiday sales thus far have fallen short of analysts’ rosy predictions for the season.
The competition for shoppers will be keen this weekend--even in Southern California, where sales have been good--because the Saturday before Christmas typically is the biggest sales day of the year.
“Weekend sales will be critical for some chains,” said Richard Nelson, a Chicago-based retail industry analyst at Stephens Inc. “Sales are lower than anyone expected--especially for chains that stock cold-weather clothing. But the story isn’t over. There’s still time to make up the difference.”
Department stores have suffered the most because they rely heavily on apparel sales and some of them are trying to rebound from difficult years. J.C. Penney, Sears, Roebuck & Co., Macy’s and others are cutting prices.
J.C. Penney, for example, is trying to lure shoppers with newspaper coupons for 15% off clearance items. Macy’s is marking down some apparel and accessories by 40% to 50%. And Sears, which has cut some of its apparel prices 30% to 50%, is offering an extra 10% off on purchases made between 8 and 11 a.m. Saturday.
“The last seven days are very important to us,” said Bob McHenry, a spokesman for Sears, where sales were down 3.6% in November compared with a year earlier.
As has been the pattern during the year, department stores have been losing sales to some of the more popular specialty apparel chains such as Gap, Abercrombie & Fitch, Old Navy and Limited. Those chains are less dependent on outerwear and aren’t being forced to take big markdowns.
Analysts say there will be fewer markdowns at home furnishings stores such as Crate & Barrel, Pier One and Bed, Bath & Beyond because demand for merchandise for the kitchen, bathroom and bedroom has been strong this season. For example, Bed, Bath & Beyond said Thursday that same-store sales--revenue from stores open at least 12 months--was up 8.8% for the 13-week period ended Nov. 28.
But some smaller stores say the mild weather has hurt them. Hot Topic, a seller of trendy teen clothing and accessories, on Thursday blamed the weather for a 10.2% drop in sales over the last six weeks.
Wal-Mart, Target and Kmart typically reduce prices on some goods during the final week of the season. But Kmart, with more stores in the East and Midwest than its competitors, is taking steeper price cuts to move winter clothing.
“People in the Midwest have been playing golf in December,” said Kmart spokesman Bob Burton. “We need winter to make an appearance.”
Retailers face less pressure in Southern California because the weather was cooler than usual earlier this month. Nonetheless, retailers say there will be more markdowns in the Southland compared with a year ago, in part because department stores face intense competition from discounters and weak chains such as Dayton Hudson Corp.’s Mervyn’s unit that are striving to boost market share.
“The California economy is in fine shape but retailers in the state are promotional because they want to beat last year’s sales numbers and increase their share of the market,” said Ed Weller, an analyst at Sutro & Co. in San Francisco.
“The weather [in California] has been good for business,” said Michael Steinberg, chairman of Macy’s West, the San Francisco-based division that operates the chain’s Western stores. “It’s been cooler and we’ve been able to meet our sales goals thus far.”
“Sales at Target and Mervyn’s in Southern California have been slightly better than the rest of nation,” said Susan Eich, a spokeswoman for Dayton Hudson, the Minneapolis-based operator of those chains.
Some people in the industry are predicting a sales rally this weekend. John Konarski, vice president of the International Council of Shopping Centers, a trade association, said weather is less important in the final days before Christmas: “Consumers have to purchase gifts at some point.”
And, analysts note, consumers have been shopping later and later in the season. Sales during the final 10 days of 1997 accounted for 44% of holiday season revenue compared with 32% during the same period in 1995.
The ICSC reported a sales increase of 4.5% at specialty stores located in shopping malls last week, an improvement over earlier weeks.
Also, retailers may finally be getting some help from Mother Nature. Temperatures this week hovered in the 40s and 50s in the East and Midwest, and snow was forecast in New England and the upper Midwest for the weekend.
Analysts haven’t changed their predictions of a 5% gain in holiday season sales in Southern California, which is now enjoying the warmer-than-normal weather that followed the cold snap. But analysts have lowered their predictions of a 4% to 5% gain over last year for the industry overall. A number of analysts say retail sales will rise by only 3% to 4% over 1997.
“Consumer confidence has slipped because there’s been a rash of layoffs announced recently--job reductions at Citicorp, Boeing, Bankers Trust and Exxon,” said Kurt Barnard, a New Jersey-based retail economist. “This kind of news dampens the willingness to spend.”
Unseasonably warm weather in some regions prompted John Pitt, an analyst at LJR Redbook in New York, to lower his projections.
“Retailers won’t be able to recoup all the sales they lost the past three weeks,” he said.
Pitt said department stores will end the season with gains of 2% to 3%; apparel sales at specialty chains will rise 6% to 8%; and discount chains will record gains of 5% to 6%. The projections for department stores and discount chains are half a percentage point lower than the estimates Pitt made a month ago. He said he lowered his expectations when he reduced his overall sales projections.
