Advertisement

Holiday Shopping Season Is Off to a Ho-Ho-Hum Start

Share
TIMES STAFF WRITER

Apparel sellers in November benefited from colder weather throughout much of the nation, but the retail industry overall fared only moderately well as a slowing economy continued to weigh upon the sector.

In spite of some better-than-expected performances in same-store sales, retail stocks suffered from concerns that companies posting healthy sales gains did so by reducing prices, threatening profits.

“The November business was just sort of OK--it wasn’t horrible, it wasn’t great,” said Richard Baum, retail analyst with Credit Swiss First Boston in New York. “So we’ve definitely got the stage set for a promotional December.”

Advertisement

Retailers already nervous about a late holiday shopping season, which this year includes a full weekend before the Monday holiday, are even more skittish after a lukewarm launch to the season.

So rather than risk being caught with leftover merchandise, sellers this year are more likely than ever to drastically reduce prices as the season goes on.

Sales released Thursday for stores open at least a year showed shoppers flocking to Sears for appliances, department stores for warm clothes and electronics stores for personal technology products.

At the same time, about 54 million shoppers headed online, according to a Nielsen/NetRatings report released Thursday--about 40% more people clicking their way through stores than last year.

Online king Amazon.com led the way with Mypoints.com coming in No. 2, according to Media Metrix. Peoplepc.com and Radioshack.com were the top gainers during Thanksgiving week, with more than an 80% traffic gain for both.

In the bricks-and-mortar world, however, retailers had to aggressively mark down merchandise to drive traffic during the Thanksgiving weekend. For the most part, the formula worked, as shoppers were brought to the stores in search of money-saving deals.

Advertisement

Retailers in November boosted sales 3.3% over the same time last year, according to Goldman Sachs & Co. Economists at Bank of Tokyo-Mitsubishi pegged their retail index at gaining 3.4% from November last year.

Those are middling grades--a slight increase over last year’s stellar pace, but at a much slower rate, in step with the broader economy.

Luxury retailers posted surprisingly poor numbers for the weekend, with highflying Neiman Marcus’ same-store sales falling 2.5%, and Saks Inc. reporting flat sales.

Also disappointing was preppy clothing seller Abercrombie & Fitch, down 8% rather than the 2% fall some analysts expected. Intimate Brands, the parent company of Victoria’s Secret and Bath & Body Works, likewise suffered during November, with sales down 3%.

Ann Taylor, a steady performer over the past year, showed sales down 2.9%; Banana Republic, which lately has been Gap Inc.’s only bright spot, fell between 4% and 6%, contributing to the parent company’s 1% overall decline in stores.

Shares in Ann Taylor fell $8.69 Thursday to $20.75, and Abercrombie & Fitch closed down $7.31, to $20.88, both on the New York Stock Exchange. Gap fell 88 cents, to $24.94 on the NYSE.

Advertisement

“The overall market is slowing, so consumers chose based on which store had the better promotion this time,” said retail economist Michael Niemira at Bank of Tokyo-Mitsubishi in New York.

Gap’s namesake domestic division, however, posted a surprising 4% to 6% gain, after months of missed fashion trends and plummeting sales.

Talbots soared without much promotional activity, Baum said, with sales up 21.9%

Department stores, which often take the first hit when consumers scale back buying, also performed better than expected, with a sector gain of about 2.1% according to Goldman Sachs.

May Department Stores Inc. gained 2.8%, perpetual winner Kohl’s Corp. was up 11.2% and even straggler Mervyn’s garnered a 5.3% gain from the same period last year, which was particularly bad for the chain.

Mervyn’s parent, Target Corp., posted an overall sales gain of 5.4%, with Target Stores leading the way with a 5.9% gain.

Sears, Roebuck & Co. posted sales at the higher end of its estimate, with a 2.8% gain. Federated Department Stores Inc. met Goldman Sachs’ estimates, with a mere 1.4% gain.

Advertisement
Advertisement