Merchants' mood not merry
Advertiser News Services
NEW YORK — The Christmas shopping season, already expected to be disappointing, is turning out to be even more gloomy for the nation's retailers.
Associated Press
With November sales results the weakest since 1990, merchants have few hopes for the final weeks of the season as they contend with unseasonably warm weather and consumers' frugality. Even heavy discounts, which are deeper and earlier than a year ago, haven't made consumers forget their worries about job security.
People enjoyed spring-like weather in Philadelphia yesterday, but such unseasonable warmth and consumers' frugality are cutting into retail sales.
"This is not the lead into the holiday season that retailers would have hoped for," said Michael Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd., who cut his holiday sales growth forecast in half to 2 percent from 4 percent on Thursday, when the nation's retailers reported their dismal November results.
"Neither the job market nor the retail industry will improve quickly and, right now, retailers don't have a lot of tools to work with," Niemira said. "They can discount more, and you can basically hope that whatever promotions they use will get people into the stores."
Retailers aren't letting up discounts and promotions this weekend.
At Federated Department Stores Inc.'s Macy's, shoppers can clip out coupons and get an extra 15 percent off certain items already on sale through Monday. Sears, Roebuck & Co. is giving an additional 10 percent off almost everything, including sales items, from 7 to 10 a.m. tomorrow.
Low-price merchants including Wal-Mart Stores Inc. and Kohl's Corp. are expected to attract the most shoppers as consumers look to stretch their budgets, analysts said.
The Bank of Tokyo-Mitsubishi Ltd. index rose only 2 percent for November, below the 3 percent forecast. The results were the weakest since November 1990, when the index had a 1.3 percent gain.
The weeks following the Thanksgiving weekend are traditionally subdued, with a last-minute shopping rush beginning the week before Christmas, but Niemira was surprised to see that sales have been even more lifeless than he expected. Sales for the 79 stores he tracks dropped 1.7 percent during the week of Nov. 25 from the previous week.
Niemira and others are bracing to see how the rest of the season plays out.
"Retailers have to make every prospective customer their best customer," said John Champion, managing director of Kurt Salmon Associates, a retail consulting firm. "The sale signs are up in mass quantities, but it doesn't seem to be helping."
The International Council of Shopping Centers said sales at 4,000 specialty stores at 80 regional malls nationwide dropped 2.1 percent from Nov. 23 through Dec. 2 from the year-ago period.
Tele-Check Services, Inc., a check approval service, said sales paid for by check at stores open at least a year rose a modest 2.1 percent for the first 10 days of the season.
One of the biggest disappointments has been apparel, particularly sweaters and outerwear that have been hit the hardest by almost tropical temperatures in most of the nation.
The average temperature last month was 47.8 degrees, far higher than the 38.4 degrees a year ago, according to the National Climatic Data Center.
"When it is 70 degrees out, you're not thinking Christmas," said Scott Bernhardt, senior vice president of business development at Planalytics, which predicts weather conditions for corporate clients.
He said a cold weather snap will come later this month, but that might be too late for many retailers who hoped to sell winter clothes early and at regular prices.
"The apparel area has been a disaster," said Carl Steidtmann, director of Deloitte Research, noting that the category has also been bruised by consumers' shift toward basics, away from anything ostentatious.
Analysts said they expect to see heavier discounting as retailers try get rid of the merchandise.
