Holiday tally: Picking the winners and losers

Luxury sellers shine, department stores surprisingly popular with shoppers, but not much cheer at Wal-Mart and Gap.

By Parija B. Kavilanz, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Sales this final weekend before Christmas will be critical for retailers as the 2006 holiday shopping season heads to a nail-biting finish.

The National Retail Federation (NRF) anticipates that sales during November and December will rise 5 percent to $457.4 billion, which is slower than last year's 6.1 percent increase for the same period.

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But because Christmas Day falls on a Monday this year, shoppers get one more day to score very last-minute deals.

With so many consumers not even started with their gift buying, industry watchers say retailers need a blockbuster weekend in order to reach holiday revenue and profit targets.

According to the NRF, the Saturday before Christmas is typically the busiest shopping day of the year.

With that in mind, mall operators are gearing up for a heavy rush of shoppers in the days ahead.

"We've already seen traffic building this week to our locations and we think Saturday could be even bigger than Black Friday," said Anita Boeker, sales at marketing director with Craig Realty Group, which operates 10 outlet malls on the West Coast. Black Friday, the day after Thanksgiving, marks the traditional start of the holiday gift-buying period.

Boeker said the 10 centers will have extended hours this weekend but will close at 6 p.m. on Christmas Eve.

So with just four days to go in the Christmas countdown, where will procrastinators be shopping?

Industry watchers pick the holiday winners and losers.

The winners are..

High-end heaven: Analysts cited Nordstrom (Charts) and Coach as two winners.

To be sure, the luxury space has been on an upswing for almost two years. "There's a clear divergence in retailing between the upmarket and downmarket retailers," said Frank Badillo, senior economist with consulting firm Retail Forward.

While rising fuel prices have generally hurt consumers' ability to spend freely, the gas price inflation has affected low-income households more than upper-income families. Moreover, Badillo said the improving job market as well as income gains are more favorably skewed to higher-income consumers.

"Therefore, these consumers haven't felt the need to change their shopping patterns," he said.

Richard Hastings, senior retail economist with Bernard Sands, pointed out another factor that's bolstering luxury spending. "Any retailer that has unique products and outstanding customer service will emerge a winner with consumers. Nordstrom, Coach and Neiman-Marcus are very successful in those areas," he said.

E-tailing on fire: Online retailing is the fastest-growing retail segment. This year, e-tailing will represent more than 3 percent of total retail sales for the first time ever.

Frazzled shoppers are becoming enamored with the convenience of shopping from home. Also, experts said e-tailers have made such smart moves as offering extended shipping guarantees and improving their ability to deliver the goods on time.

On Thursday, ComScore Networks upped its holiday forecast, citing much stronger-than-expected online sales activity.

Consumer electronics: Lots of demand for flat-screen TVs, MP3 players and other gadgets ensured that this sector would be a definite winner in terms of traffic trend and volume of transactions.

However, the steep price wars for flat-panel TVs flattened profits at Best Buy (Charts) and Circuit City (Charts).

Said Hastings, "I would say that consumers were the ultimate winners here because of all the discounts and retailers' price-match policies on TVs and other gadgets."

Department store revival: Analysts gave a thumbs-up to Macy's, owned by Federated Department Stores, as well as J.C. Penney and Kohl's.

Retail Forward's Badillo said Federated's decision to move Macy's more upmarket and improve the retailer's private label merchandise paid off. Penney and Kolh's offered a wide variety of brands at affordable prices, he said.

Others said Macy's did a much better job this year with its holiday marketing strategy. "I'm in awe of their marketing," said Candace Corlett, retail analyst with WSL Strategic Retail. "As soon as you swiped your card at the Macy's store, they'd send you more coupons in the mail," she said.

Jewelry sparkles: The consensus among analysts is that the "Blood Diamond" movie had little to no impact on diamond jewelry sales.

The jewelry industry was concerned that the controversial film, which showcases illicit gem trade in Africa, could deter consumer from gifting diamond jewelry.

Sherrie McAvoy, retail sector analyst with Deloitte & Touche, anticipates that jewelry sales rose slightly year-over-year and will get a late-season surge from procrastinators.

.... and the losers

Discount doldrums: Despite Wal-Mart's (Charts) early holiday price-cutting, the world's largest retailer failed to generate the sales it sorely needed last month. Wal-Mart posted a dismal 0.1 percent dip in sales at it stores open at least a year, which is a key measure of retail performance known as same-store sales.

Rival Target (Charts) fared better. But analysts said Target probably benefited from the weakness at Wal-Mart. So what went wrong?

Said Badillo, "Wal-Mart's core shoppers are low-income families. Those families go after the big deals and that's it. Target has slightly more upscale shoppers who can afford more."

Bernard Sand's Hastings also faulted Wal-Mart and Target for not having "exciting" holiday products other than some good deals in toys and electronics.

However, analysts pegged wholesale club operator Costco (Charts) as a sector winner for continuing to surprise its customers with unexpected products such as high-end cashmere clothing and jewelry at affordable prices.

Apparel wrinkled: Experts said no major fashion trend and unseasonably warm weather hurt sales of winter apparel this holiday season. Sales at No. 1 clothing seller Gap Inc. (Charts) slipped 2 percent in November and are likely to be soft in December as well.

Home not so sweet anymore: The biggest loser in the home furnishings sector is likely to be Pier 1 Imports, which posted a dramatic 15.3 percent drop in its November sales. Analysts said the sector is suffering from an ongoing downturn in the industry.

At the same time, Pier 1 and other home furnishing sellers are losing market share to discounters such as Wal-Mart and Target who have expanded their presence in the home category.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.