With Lackluster Sales, Stores Hope for Brighter Days Ahead

Sears, Roebuck & Co., Federated Department Stores Inc., May Department Stores Co. and other U.S. retailers are cutting prices throughout their stores to salvage a weaker-than-expected holiday season.

Sales at stores open at least a year rose less than 1% in the season’s first 24 days ended Sunday, said First Data Corp.’s TeleCheck. So-called same-store sales have slowed since rising 3% during the Thanksgiving weekend as warm weather hurt demand for clothing and shoppers procrastinated or held out for lower prices.

Retailers are banking on price cuts of half off or more to help meet sales forecasts for the season, which can account for as much as half of annual profits. Shoppers have also been holding out for the deepest discounts, even if that means buying goods after the holiday. The final two weeks of December accounted for about half of last season’s sales.

“The post-Christmas period is becoming increasingly important,” said portfolio manager Brian James at Loomis Sayles & Co., which owns shares of retailers.

Strong demand for household goods such as candles and clothing at low-priced chains could offset slumping sales at department stores, analysts said. Sales so far are meeting or exceeding forecasts at discounters such as Wal-Mart Stores Inc. and Kmart Corp. and specialty chains, including clothing seller Abercrombie & Fitch Co. and electronics chain Best Buy Co., analysts said.

Same-store sales are expected to rise 4.5% to 5% for the November to December period, the Bank of Tokyo-Mitsubishi said. Sales rose 4.4% in November.

Unusually warm temperatures have damped demand for sweaters, coats and other cold-weather clothes at department stores. Clothing sales rose just 0.2% in the week ended Sunday, said the International Council of Shopping Centers.

Sears, the nation’s largest department store, said same-store sales for the week ended Saturday were less than it had planned and below last year because of slow clothing sales.

“If it wasn’t for hardgoods and hardware, they’d be doing terrible,” said consultant Kurt Barnard, who has cut his overall holiday sales forecast to a rise of 3% to 4%, from estimates of 4% to 5%.

Dayton Hudson Corp. said sales at the Target discount chain were meeting its plan for low- to mid-single-digit rise; department stores were slightly better than expected.

Shoppers in recent years are making more of their purchases later in the season, waiting for chains to cut prices.

Sales could get a boost in the next week as customers redeem gift certificates and return or exchange gifts. Almost 44% of consumers plan to shop Saturday, the day after Christmas, topping the 38% who shopped the day after Thanksgiving, according to a poll by America’s Research Group.

Some chains are discounting additional items and cutting prices on already marked-down goods to motivate shoppers. Macy’s has savings of as much as 50% on some goods and is offering coupons for 20% off almost any item.