Post-holiday sales ‘too little, too late’

Associated Press

NEW YORK — Shoppers rushed to stores for post-Christmas sales Wednesday, taking advantage of merchants’ need to cut prices even more, unload their wares and put behind them the weakest holiday season in a decade.

Hana Marra walked out of Atlanta’s Lenox Square Mall with a pair of black leather Coach boots she’d been coveting — and which now were half-price.

"I came in last week twice and they were $300," Marra said, smiling and pointing to the 50 percent-off price tag. "See, it pays to wait."

For stores, the sales were designed to clear merchandise and make room for their spring lines rather than make profits that might save the dismal season.

"It’s too little, too late," said Michael Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd.

He said he expects an anemic average gain of 1.5 percent to 2 percent in holiday season sales, compared with last year’s, for the 88 stores he tracks. That’s in line with his forecast, reduced earlier in the season, and is the poorest performance since at least 1990, when the increase was 2 percent.

And sales don’t equal profits, which Niemira believes could be down as much as 10 percent, weaker than the 5 percent decline he had anticipated.

That means many retail companies will be focusing on shutting down some stores and finding other ways to cut costs next year.

One company that beat the trend and fared well was Wal-Mart, which said Wednesday that sales increases from Nov. 23 to Dec. 24 were above its previous expectations of about 4 percent. It now expects about 6 percent or more, and that it achieved the increase with "minimal markdowns."

Wal-Mart said its best sales were in electronics, toys and women’s apparel.

There was also cheerful news for online companies, with Yahoo! Inc. saying its holiday sales were up 86 percent from a year ago, led by video game consoles, digital cameras, laptop computers, toys and apparel.

But Kmart Corp., which bucked the trend of most discounters, said that holiday sales are below its forecast of no more than a 2 percent gain, blaming it in part on reduced advertising.

And department stores and apparel retailers, hurt by unseasonably warm weather and consumers’ focus on home-related merchandise, continued to suffer.

Richard Jaffe, an analyst at UBS Warburg, estimates that December sales for the 48 apparel retailers he tracks will be down at least 5 percent for December. And he doesn’t believe the outlook will improve before next fall.

"We need to see some sort of economic improvement to make consumers start spending on apparel," he said. The lack of a major fashion trend also is hurting the business, he said.

The last seven days of the month typically account for 10 percent of holiday sales, when merchants get rid of the mounds of holiday leftovers. Spring goods start arriving next week.