Discounts Give Holiday Sales a Better-Than-Expected Start
Consumers gave most retailers a better-than-expected start to the holiday shopping season, sellers said Monday, with both online stores and malls reporting significantly more visitors than last year.
Even so, economists are not quite ready to break out the champagne. Retail analysts are waiting until November sales reports are released Thursday to determine whether traffic translated into sales.
What’s more, many on Wall Street warn that the true retail story might not emerge until early next year, when sellers post fourth-quarter profits.
Anecdotal reports described sellers offering deep discounts to drive their sales, which could put a crimp in profits. Once the Friday specials ended, so did many of the sales, which grew weaker as the weekend wore on, said retail economist Michael Niemira at Bank of Tokyo-Mitsubishi in New York.
“It was a heavily promotional day on Friday and to the extent that the retailers promoted, they got the sales,” Niemira said. “The sales may not have been terribly profitable, but retailers got the headlines saying ‘Strong start to season.’ ”
Retail stocks rallied on the positive news, with Wal-Mart Stores Inc., Gap Inc. and Sears, Roebuck & Co. leading the way. Electronics store RadioShack Corp. said sales exceeded expectations, while retail giant Wal-Mart said sales would be at the high end of expectations.
Kmart, however, warned analysts that its sales could be below estimates for the period, and Federated Department Stores missed an expected 2% sales gain for November, achieving only a 1.4% rise in sales through Nov. 25.
Sears said sales Friday were led by apparel--good news for the company, which has struggled with its “soft” lines. The so-called hard lines--tools and appliances--dominated Saturday sales, the retailer said Monday.
Online retailers EToys Inc., Yahoo Inc. and America Online Inc., among others, also got a boost on Wall Street from strong weekend sales.
One-day retail stock gains, however, were not enough for some retail veterans to change their projections for a so-so holiday season.
“I’m not nearly as positive as the market,” said Peter Schaeffer, a retail and consumer product strategist for Ernst & Young in New York. “The market is looking for anything positive. Any bit of good news puts this rush on the market and pushes up whatever stocks are in vogue that day.”
During the weekend, mall traffic grew 6.5% from last year, according to the National Retail Federation. On Friday, about one in every four Americans headed to the mall, up 9.7% from last year.
Nielsen/NetRatings said the number of online shoppers during November grew more than 29% since November 1999. Yahoo reported twice as many shoppers as it had last year on the day after Thanksgiving.
AOL said 6 million members bought online last week. The nation’s largest Internet service provider also said its shoppers spent an average of 27% more than the same time a year ago.
However, much of the Web buying seemed to be driven more by convenience than bargain hunting.
“People are trained to shop after Thanksgiving,” said Rob Solomon, director of Yahoo shopping. “This is the day you watch football or you go out and go shopping--or, if you’re really lazy, do both and shop from your computer.”
Last year, online sales the day after Thanksgiving were relatively unimpressive, which was attributed to the still-small number of Internet users and the fact that many workers took the day off. Online shopping increases during work hours, because many users take advantage of high-speed Internet connections at the office to browse and buy.
At least part of the online gain is due to the overall growth in the number of Internet users. In the last two years, about 32 million Americans went online for the first time, according to the Commerce Department.
In a report to clients, Goldman Sachs & Co. e-tail analyst Anthony Noto cautioned against expecting strong online sales to lead to a rally in online retail stocks. At this point, Noto said that only a select few e-tail stocks are expected to rise this year.
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Santa Visits Wall Street
Retail stocks were among Monday’s big winners, after a strong start to the holiday shopping season. A sampling:
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Mon. Mon. Pctg. Stock close change change EToys $2.00 +$0.19 +10.3% Gap 27.31 +2.31 +9.3 Wal-Mart 49.31 +4.13 +9.1 Hot Topic 38.00 +2.69 +7.6 Sears 32.01 +2.13 +7.1 American Eagle 43.50 +2.56 +6.3 Pier One 13.88 +0.75 +5.7 TJX 26.50 +1.38 +5.5 May Dept. 29.31 +1.50 +5.4 Nordstrom 16.50 +0.75 +4.8 S&P; 500 index 1,348.97 +7.20 +0.5
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Source: Reuters
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