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Holiday hopes hinge on weekend
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December 21, 2001: 3:42 p.m. ET
Retailers bank on crush of last-minute shoppers to bolster sales numbers.
By John Chartier
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NEW YORK (CNN/Money) - As retailers look to boost sales in a rough holiday season, Sears Roebuck and Co. and value retailer Kohl's Corp. announced Friday they would lengthen store hours for the last-minute rush.
A spokesman for Kohl's (KSS: down $0.12 to $68.48, Research, Estimates), which is based in Menomonee Falls, Wisconsin, said it will open its stores on Saturday from 7 a.m. to midnight and carry 50 percent discounts on items like selected outerwear, footwear and up to 60 percent off fine jewelry.
A Sears (S: up $0.34 to $47.36, Research, Estimates) spokeswoman said its stores will open from 7 a.m. to 11 p.m. on Saturday.
"We are hopeful that this will be a very solid weekend," she said, but said it was still on track for a "decrease" in December same-store sales from "low to mid-single digits".
Retailers are banking on a crush of last-minute shoppers to prop up what has been a disappointing holiday season, marked by consumers who continue to be cautious in the face of economic uncertainty.
A third of all holiday sales occur in the last week before Christmas, according to the National Retail Federation. That means in a year marked by lower spending, this weekend could prove the hinge on which many retailers' sales expectations are made or broken.
"Retailers have been planning for that lower traffic. The question now is, will the consumer in the last weekend of the season spend a little bit more or not?" said Michael Niemira, senior economist at the Bank of Tokyo-Mitsubishi.
"I don't see anything that retailers are doing significantly swaying people's decisions at this point," said Russell Jones, vice president retail consulting at Cap Gemini Ernst & Young.
"There's been so many sales, and discounting started early enough that at this point I don't think people will be persuaded to shop based on the new discounts that are being offered," he added.
Analysts and industry experts are forecasting holiday sales will range anywhere from flat to about 2.5 percent above year-ago levels. While not disastrous, retailers have had to resort to steep discounting to drive sales. That means significant pressure on the bottom line, even if they meet their lowered sales expectations.
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The question now is, will the consumer spend a little bit more or not in the last weekend of the season?
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Michael Niemira
Senior Economist
Bank of Tokyo-Mitsubishi |
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Niemira, who compiles a weekly report on chain store sales, is anticipating December sales at stores open at least a year, a closely watched gauge known as same-store sales, to come in flat to 1 percent higher than a year ago.
The National Retail Federation, one of the industry's biggest trade groups, is maintaining its forecast for a 2.5 percent increase in same-store holiday sales over a year ago.
"After judging December so far, there's no reason for us to change course," NRF Spokesman Scott Krugman said.
Categories that have performed well this season include consumer electronics, home furnishings, crafts and jewelry.
Analysts say these categories are stronger because consumers have turned inward toward their homes and loved ones in the aftermath of the Sept. 11 terrorist attacks and a down economy that has elicited hundreds of thousands of layoffs.
Apparel has proven to be the biggest disappointment so far, hurt by unseasonably warm weather and a shift away from traditional department stores and specialty apparel shops.
That has hurt such chains as Gap (GPS: up $1.09 to $13.26, Research, Estimates), AnnTaylor (ANN: up $1.01 to $34.22, Research, Estimates) and Nordstrom (JWN: down $0.03 to $19.29, Research, Estimates).
Discount chains, led by Wal-Mart Stores Inc. (WMT: up $1.23 to $57.49, Research, Estimates), the world's biggest retailer, are expected to reap the biggest gains this season. It's not a new story. Consumers have been turning to such chains in search of bargains and avoiding traditional department stores such as Federated's (FD: down $0.40 to $37.90, Research, Estimates) Macy's, May's (MAY: down $0.34 to $35.96, Research, Estimates) Lord & Taylor and Saks (SKS: up $0.92 to $9.80, Research, Estimates).
Wal-Mart Monday projected December sales to increase 4 to 6 percent from a year ago. Spokesman Tom Williams said seasonal items, consumer electronics, fabrics and crafts are selling well.
Further evidence of strength in the discount segment is recent mall traffic, which declined 0.6 percent last week, marking the third consecutive weekly decline, according to the International Council of Shopping Centers. The lower numbers show that consumers have been avoiding malls and opting instead for stand-alone stores.
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ICSC spokesman Malachy Cavanaugh said he's anticipating a 2 percent increase overall in shopping center sales for the period from Black Friday (the day after Thanksgiving) to Christmas Eve, compared with a year ago. But he acknowledged that total December sales could fall below year-ago levels.
"Discounters have continued to do well. There are some categories that are just doing well and confirming that consumers, because of Sept. 11 and the economy, have gone into this cocooning mode," Cavanaugh said. 
-- Reuters contributed to this report
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