The holiday shopping season ended better than it started and most retailers are on track to meet humble sales goals, though many still hope for an extra boost the week after Christmas as consumers cash in gift cards.
Wal-Mart Stores Inc., which got off to a slow start, said Monday that December sales would come at the midpoint of its modest December forecast thanks to brisker-than-expected business the Sunday after Christmas.
Sharper Image Corp., meantime, reduced its earnings outlook for the fourth quarter and full year because of disappointing holiday sales that were marred by inadequate inventories of certain items.
J.C. Penney Co. Inc. expects same-store sales, a measurement of sales at stores opened at least a year, to rise by single digits for the combined November and December period. Same-store sales are considered the best indicator of a retailer’s health.
“It came down to the wire, and last week was particularly strong,” said Michael Niemira, chief economist at the International Council of Shopping Centers.
“Even if it comes in where we expect, it is still a modest performance,” he added. “But it is still better than what we had feared two or three weeks ago.”
Niemira said he is now more confident that the International Council of Shopping Centers-UBS sales tally for the combined November and December period will be up anywhere from 2.5 percent to 3 percent. He had originally projected that sales for the period would rise anywhere from 3 percent to 4 percent.
Still, with gift cards increasingly popular, many merchants are relying even more on the week after Christmas, hoping that consumers will spend them immediately. Gift cards are recorded as sales only when they are redeemed.
The National Retail Federation estimated $17.24 billion worth – or about 8 percent of holiday sales – will be sold in gift cards this season.
The industry association is sticking with its forecast of a 4.5 percent gain in total sales for November and December. That excludes restaurant and auto sales.
“This week will be important to closing out December and making our plan,” said Penney’s Lyons.
Other bright spots this season have been online shopping, with sales beating projections, and luxury stores, which have continued with robust sales.
Online holiday sales are now likely to increase 28 percent, beating its original projections of 23 percent to 26 percent, according to comScore Networks Inc., an Internet research firm.
The mid-to low-price stores – whose customers are more vulnerable to the economy’s woes and had pushed hard with discounts – further sweetened the deals on the day after Christmas, offering savings of up to 75 percent.
Wal-Mart, which had approached the season aiming to be less aggressive in discounting than a year ago, had to step up price cutting amid disappointing sales.
On Monday, Wal-Mart reported strength in food and general merchandise sales for the week ended Friday. Sales of gift cards were up significantly over last year, it said.
Still, December’s same-store sales gains will be modest – hitting a midpoint between 1 percent and 3 percent.
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