|
Retailers warn of softness
|
 |
December 26, 2000: 6:17 p.m. ET
Same-store sales rise in December; retailers hope for post-holiday boost
|
NEW YORK (CNNfn) - Wal-Mart Stores Inc. and other retailers said Tuesday that their December same-store sales are expected to fall short of forecasts, confirming earlier fears that shoppers scaled back their holiday spending amid signs of economic slowdown.
According to the TeleCheck Retail index, a spike in consumer spending in the last few days leading up to Christmas pushed up holiday same-store sales by 3.1 percent. The index measured sales from Nov. 24 to Dec. 24.
"Despite this mini-surge in spending, the modest gain in same-store sales did not meet early projections," said William Ford, senior economic advisor at TeleCheck.
Retailers are still hoping that a wave of post-holiday shopping could help boost December results. But already, two major retailers – Wal-Mart and Federated Department Stores -- said December same-store sales, a key measure of a retailer's performance, are on pace to ring in below forecasts.
Wal-Mart (WMT: Research, Estimates), the No. 1 U.S. retailer, said this month's same-store sales – sales at stores open at least a year -- are expected to fall short of earlier projections of a 3 to 5 percent increase. Wal-Mart stock fell $2.81 to $49.63 in afternoon trading.
Federated (FD: Research, Estimates), the parent of Macy's and Bloomingdale's, said it expects same-store sales to rise 1 to 2 percent, down from original expectations of 3 percent growth. In afternoon trading, the Cincinnati-based company's shares lost 94 cents to $30.19.
Jewelry retailer Zales Corp. (ZLC: Research, Estimates) said it expects same-store sales in the combined months of November and December to slip 2 to 3 percent, compared with a 16.3 percent jump during the same period last year. The Dallas-based company reduced earnings estimates for the fiscal second quarter ending Jan. 31 to $2.42 to $2.50 per share, compared with the First Call consensus forecast of $2.77. The stock fell $1.38 to $24.63 following the warning.
| |
|
|
| |
|
|
| |
You can save a lot of money today. I'm not going home until I've got it all done.
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Annie Hughley
post-holiday shopper |
|
For the retail sector as a whole, same-store sales are expected to rise about 3 percent in December, according to forecasts by Kurt Barnard, president of Barnard's Retail Trend Report in Upper Montclair, N.J. That's about half the 6.5 percent increase retailers reported in December 1999.
"There's a general sense of weakness and caution and I'll tell you, the headlines in the newspapers these days do not help," Barnard said. "We're seeing more layoffs and consumers are beginning to feel there's a cold winter breeze suddenly blowing their way."
Looking for bargains
Meanwhile, shoppers flooded to the malls Tuesday to return and exchange gifts or to take advantage of after-Christmas sales. Industry experts say that last year, more people went shopping the week after Christmas than during the weekend after Thanksgiving, making the next few days crucial for retailers' December results.
"You can save a lot of money today," post-holiday shopper Annie Hughley, of Decatur, Ga., told The Associated Press. " I'm not going home until I've got it all done."
Most retailers will announce their December same-store results on Jan. 4. But industry analyst Dana Telsey of Bear Stearns said she expects the tough retail environment will take its toll on the bottom line when companies release their fourth-quarter earnings results next year. As the slowing U.S. economy has cut into consumer confidence, many retailers were forced to slash prices in recent weeks in an attempt to lure holiday shoppers to the cash register.
"We do believe that many of the earnings numbers will be lowered on the downside given the heavy rate of markdowns that we're seeing throughout the stores recently," she told CNNfn's Market Call.
Done shopping for the holidays? Take our poll
Meanwhile, a study released Tuesday showed that online holiday spending more than doubled this year from 1999 levels. Overall Internet holiday spending from the first week in November to Dec. 17 totaled $8.7 billion, up 108 percent from $4.2 billion in 1999, according to the study by investment bank Goldman Sachs and Web-research firm PC Data.
Internet portal Yahoo! Inc. said holiday shoppers swarmed to its site, although that had limited impact on its finances. The company said that holiday-shopping order volume through its shopping.yahoo.com page in the United States nearly doubled from the same period in 1999.
Kmart Corp.'s e-commerce arm, Bluelight.com, said its holiday sales jumped more than 1,000 percent compared with last year's, when Kmart (K: Research, Estimates) ran the site as www.kmart.com.
Many online retailers are advertising deep discounts on their merchandise, trying to keep pace with sales offered by traditional "brick and mortar" retailers. Financially troubled Etoys Inc. (ETYS: Research, Estimates) on Tuesday offered discounts of up to 75 percent on its merchandise. 
|
|
|
|
|
 |
|
