NEW YORK – The holiday shopping outlook was hazy Thursday after the nation’s retailers reported a mixed start to the season that showed consumers were willing to spend only when they found bargains.
One thing was certain, however: Retailers are likely to resort to heavy markdowns in hopes of meeting their sales targets. Many of November’s winners were stores that heavily discounted over the Thanksgiving weekend, including Wal-Mart Stores Inc. and J.C. Penney Co.
November had some surprises: Upscale retailers were among the disappointments, including Nordstrom Inc., usually a top performer. On the upside, Limited Brands Inc. had solid gains after struggling for months with its fashions. Limited’s sales were fed by a combination of aggressive price cutting and a makeover at its Express division.
“You had some very good performances by only a handful of stores, but you also had a fair amount of weakness,” said Michael Niemira, chief economist at the International Council of Shopping Centers. “Most of the business was driven by promotions.”
“More of the season’s sales now ride on December, which is dicey because of the weather and promotional activity,” which could hurt store profits, he said.
The UBS-International Council of Shopping Centers’ November sales tally of 65 retailers rose 3.5 percent last month; the results matched Niemira’s forecast, but beat a meager 1.8 percent increase a year ago. The sales tally is based on sales at stores open at least a year, known as same-store sales.
Niemira added, “The economic numbers look better, but on the other hand, you worry about consumers’ ability to spend.”
The Commerce Department reported separately Thursday that personal spending edged up in October, while incomes rose 0.4 percent. In another report, the Labor Department said the number of hurricane-related job losses totaled 9,600 last week, a substantial improvement from 21,000 the previous week.
Retail analysts were optimistic going into the holiday season because gasoline prices have fallen from their September highs. The latest batch of upbeat economic data and a rebound in consumer confidence in November were encouraging signs that shoppers might start to be more generous.
But big challenges remain. While gas prices have fallen, they’re still above last year’s levels, and home heating costs are also expected to be high.
Another factor is that there doesn’t seem to be any particular must-have item this season, besides the new game console from Microsoft, Xbox 360. And some analysts believe consumers’ focus on electronics – particularly flat-screen TVs and digital cameras – could hurt apparel sales.
Even in toys, electronic items are doing the best, particularly Hasbro Inc.’s iDog and Fisher-Price’s Dora’s Talking Kitchen, according to retailers.
Madison Riley, a strategist at Kurt Salmon Associates, noted that a late Hanukkah, which begins Dec. 25, could further “accentuate the last-minute shopping,” putting stores more on edge.
Michael V. Martina / The Herald
Huge snowflakes fall on shoppers at Alderwood mall in Lynnwood on Thursday.
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