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Did shoppers come through?
Weekly online sales growth accelerates, but analysts worry about overall retail sales.
January 2, 2004: 8:16 AM EST
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - Total online retail spending (excluding travel and auctions) for the week ended Dec. 19 rose 31 percent to $1.65 billion, according to comScore Networks, but some analysts were worried about how overall retail sales will ultimately come in.

Online sales are up 29 percent since the holiday shopping season began in November, according to comScore. The online sales tracker, which compiles sales data from 50,000 online merchants, had previously forecast total online retail spending in November and December of between $12.1 and $12.6 billion, or between 25 percent and 30 percent growth.

Retail sales for this weekend -- both online and off -- will be crucial, since snowstorms in the northeast had already dampened two important shopping weekends.

Heading into this weekend, the National Retail Federation, the industry's largest trade group, was sticking to its forecast for 5.7 percent growth, though noting that 5.6 percent was possible.

But Britt Beemer, chairman and founder of America's Research Group, had already cut his forecast for holiday sales growth to 4.2 percent from 4.8 percent, and told Reuters he may have to cut further.

Shoppers are picking up pricey gifts like this $295 Burberry signature check cuff.  
Shoppers are picking up pricey gifts like this $295 Burberry signature check cuff.

"The luxury stores are the ones hitting the home runs and the discount stores are going to end up doing some pretty good numbers," Beemer told Reuters, but "I'm very worried that the middle part of the market is not here."

This middle market covers mid-priced department stores and apparel retailers, as well as some toy stores and other retailers.

Wal-Mart Stores and Target are expected to give sales updates on Monday.

Here's a rundown on the winners and losers this holiday season:

Feeling luxurious: It is a sweet story for upscale retailers like Saks (SKS: Research, Estimates), Neiman Marcus (NMG.A: Research, Estimates), Gucci (GUC: Research, Estimates) and Nordstrom (JWN: Research, Estimates).

The group posted solid sales numbers in November as shoppers snapped up Prada bags and Burberry watches.

Early indications point to strong results in December as well. Gucci on Friday logged a rise in its third-quarter profit and said it expects "excellent" results for the remainder of the year.

"This category is a definite winner," said George Whalin, president of Retail Management Consultants. "It's the economic realities that are benefiting the high-end retailers. There's been a significant bump-up in 401(k)s and people are feeling richer."

At the same time, a few high-end retailers such as Coach (COH: Research, Estimates) have reduced prices in a bid to make their expensive leather handbags and watches more affordable to the masses.

A gadgets fiesta: Digital cameras, flat-screen TVs and personal computers are quickly flying off the shelves, forcing some retailers to cope with supply shortages.

Sears (S: Research, Estimates) said the unexpected surge in demand depleted its stock of some models of the "micro projection" flat-screen TVs and the Apex model DVD players priced at $27.99.

"The demand for the micro-projection TVs was two-and-a half times our expected volume," said Sears spokesman Larry Costello. "We're buying more from our suppliers and restocking them as fast as we can."

Although industry watchers expect the consumer electronics category will be a winner, they're less sure about the performance of individual players.

Best Buy, the No.1 electronics retailer, this week cited bad weather for weaker sales trend in its fourth quarter.

E-tailing's on fire: "This is a banner year for online retail sales," said Whalin. "The weather was an enormous factor for the big holiday sales numbers. The other factor is that consumers are much more comfortable using the Internet and they're appreciating the convenience of it."

Consumers spent a record $1.9 billion dollars on Internet purchases last week, up 31 percent compared to the same period a year ago, according to comScore Networks. comScore expects total online holiday sales will grow about 25 percent to 30 percent to between $12.1 billion and $12.6 billion.

... and the losers

Discount and Department stores in distress: Both Wal-Mart (WMT: Research, Estimates) and Target (TGT: Research, Estimates) have given gloomy outlooks for December, citing softness in sales. One problem is that many retailers have been holding off on aggressive discounting, hoping consumers will pay regular price.

Anecdotal evidence suggests consumers were disappointed by the leaner promotions. All that could change as the countdown begins.

Sears already surprised shoppers with unplanned store wide sale last weekend in a bid to spur sales and could do it again. J.C.Penney (JCP: Research, Estimates) has planned a 2 to-60 percent-off store wide sale on Saturday.

No oomph in apparel: "This is the group that I'm most concerned about," said Marshal Cohen, co-president of market research firm NPDFashionworld. "There's nothing exciting here that jumps out at you and makes you want to buy it. Do I really need another striped sweater?"

Clothing is more of an impulse buy, Cohen said, and the absence of "must-have" items continues to hurt this group. "Consumers who normally would have bought clothing are looking elsewhere."

Abercrombie & Fitch (ANF: Research, Estimates) , American Eagle Outfitters (AEOS: Research, Estimates), Wet Seal (WTSLA: Research, Estimates) and Dillard's (DDS: Research, Estimates) reported disappointing sales last month. A few names that bucked the trend were Ann Taylor (ANN: Research, Estimates), Coach (COH: Research, Estimates), Gap (GPS: Research, Estimates), and Pacific Sunwear (PSUN: Research, Estimates).

Toys: The real competition this season is between the retail stores and online merchants such as eBay (EBAY: Research, Estimates) and (AMZN: Research, Estimates) as e-tailers steal customers with steep price cuts and, in some cases, free shipping.

"Toys R Us (TOY: Research, Estimates) could see a tough season overall, while discounters and online merchants will do better in this category, " said Cohen.  Top of page

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