Discounts Not Enough to Revive Weak Season
Shoppers hitting the malls early Tuesday for post-Christmas discounts found plenty of merchandise and parking, which likely means further markdowns after this year’s weaker-than-expected holiday sales.
Several retailers said Tuesday that a much hoped for last-minute shopping rush just before Christmas wasn’t enough to make up for weeks of slow buying. Analysts said they had little hope that post-holiday sales would do the trick.
Some of the country’s biggest retailers--including Wal-Mart Stores Inc., Federated Department Stores Inc. and Zale Corp. jewelers--have already announced that December sales would be below projections.
In a recorded message, No. 2 retailer Sears, Roebuck & Co. said last week’s sales for stores open at least a year would not meet its modest plan of a low single-digit increase over a year ago.
On the other hand, Amazon.com, Yahoo and Buy.com saw their stock prices gain after reports that online sales this holiday season more than doubled over last year.
Traditional retailers were punished for what some on Wall Street called poor planning and execution of all-important holiday sales.
“A weak Christmas is a precursor of next year’s economic performance,” said Michael Niemera, an economist with the Bank of Tokyo-Mitsubishi Ltd., who on Tuesday reduced his holiday sales forecast to a 3.5% increase, from 4%.
Part of the problem, Niemera said, is that there are too many stores to serve declining consumer demand.
“I think we are going to see more problems ahead for 2001, with store closings and liquidations,” he said.
And because the after-Christmas bonanza came on what was a regular work day for many people, it appeared to offer little short-term consolation.
Even if the sales bring in customers, the omens aren’t good for fourth-quarter profits, the most important period for most retailers.
“This last weekend appeared to lack the necessary acceleration in traffic that will be required to overcome weak sales throughout the month of December,” said Lazard Freres & Co. analyst Todd Slater in a note to clients. “Traffic at specialty stores fared somewhat better than at traditional department stores, although accelerated discounting will likely have a negative impact on earnings.”
The broader trends were true for friends Jackie Lang and Cookie Valente, who were scouring the sales Tuesday at the Century City Shopping Center.
“I’m being extremely careful about spending,” Valente said, adding that she and many of her friends agreed not to exchange gifts this year because of nervousness about the overall economy. “I don’t want to buy more than I can afford to pay off.”
Visitors David and Angela Corinaldi, who work in London and were in Los Angeles on their way home to New Zealand, said they were surprised the shopping malls here weren’t busier.
“It’s kind of quiet,” Angela Corinaldi said, toting bags from the Gap. “We don’t mind doing a lot of shopping--we brought big bags.”
Online companies joined in the tradition of post-holiday sales with the additional advantage of being able to capitalize on shoppers returning to work.
Industry leader Amazon.com announced its newest section of its Web site, to be opened Thursday, featuring discounted merchandise. The Amazon Outlet store is being previewed before the opening (https://www.amazon.com/outletpreview). Kmart Corp.’s Bluelight.com offered discounts up to 70%; Bluefly.com opened a clearance store; cataloger J. Jill Group announced discounts of 25% to 65%; and EToys, which was forced to announce a reexamination of the company’s viability due to weak pre-Christmas sales, announced a clearance sale of up to 75% off.
Ashford.com Inc., which sells luxury items on the Web, promoted 60% price cuts. Buy.com advertised an “After Holiday Blowout” and Barnesandnoble.com Inc. is offering as much as 50% off on books.
Total online spending more than doubled during the holiday period, according to a report released Tuesday by Goldman Sachs and PC Data, hitting $8.7 billion from $4.2 billion between the beginning of November and Dec. 17.
Traditional retailers have benefited most from the online sales gains, the study said, but shares of Seattle-based Amazon.com still gained $1.38 Tuesday, or 8.8%, to close at $16.94 on Nasdaq; electronics seller Buy.com rose 31 cents to close at 81 cents, also on Nasdaq.
At the same time, the bricks-and-mortar stores’ offline forecasts hurt their market performance. Shares of Bentonville, Ark.-based Wal-Mart fell $1.88 to $50.63; Federated shares dropped 13 cents to close at $31 and Zale fell 69 cents to $25.31. Sears was off 29 cents to $32.64. All trade on the NYSE.
Seattle-based Amazon reported shipping more than 31 million items this holiday; Yahoo said its orders on its U.S. shopping sites almost doubled this year while international orders were six times higher than last year.
At South Coast Plaza, some stores were busy enough to be a turnoff to prospective buyers.
Mary Becker heads for the malls every Dec. 26 searching for bargains, in spite of her dislike of the crowds. This year, the Huntington Beach resident started her day at Crate & Barrel at South Coast Plaza, looking for marked-down Christmas ornaments and wrapping paper. But she left without buying.
“There was about 50 people per line,” said Becker, a teacher. “Nothing’s worth that much waiting.”
But Becker didn’t leave the mall empty-handed. By noon, she had purchased a Razor scooter for $100 and some anti-wrinkle cream at full price.
“I don’t know why I do this every year,” she said. “I always think I’m gonna get such a great deal.”
By midday, Costa Mesa residents Steve and Amy Dosier, both 38, had purchased china, crystal champagne flutes and Levis at South Coast Plaza stores at a savings of about $160.
“We’re not done,” said Steve Dosier, a salesman. “Things are such a bargain now.”
Some shoppers came with returns, but left with more packages. “We spent more than we brought back,” said Mason Williams, a teacher from Playa del Rey, who had made the trek to South Coast Plaza with his wife, Esther.
Although most shoppers were drawn by the sales, some were disappointed by a dwindling selection and prices they said were about the same as before Christmas.
“They say ‘sale,’ but when you actually go in the store you’ll find it’s a limited selection,” said Adrian Marrujo, a 44-year-old Irvine aerospace program manager who was shopping at Westminster Mall on Tuesday with his family.
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Times staff writer Leslie Earnest and Times wire services contributed to this report.
