Posted on: Saturday, December 21, 2002
Retailers mount final holiday blitz for shoppers
By Rachel Katz
Bloomberg News Service
CINCINNATI — Federated Department Stores Inc., Kmart Corp. and other U.S. retailers have begun a final holiday promotional blitz, hoping last-minute shoppers will brighten what has been a lackluster holiday season.
Macy's, a unit of Federated, is cutting prices on sweaters, men's suits and cultured-pearl strands this weekend by 50 percent, as well as giving an additional 20 percent off today and tomorrow. Kmart will stay open from 6 a.m. today until 8 p.m. Christmas Eve, and is offering $25 off purchases of $200 or more in addition to as much as 70 percent off some jewelry.
Merchants need strong sales this week to at least achieve their December forecasts, analysts have said. Federated and Wal-Mart Stores Inc. have said sales at stores open at least a year so far are at the low end of forecasts. Stores will have to decide whether to offer steep discounts to lure shoppers or hope procrastinators won't be picky about prices, investors said.
"The consumer has so far held back a little," said Christopher Beck, who manages the Delaware Small Cap Value Fund, a part of Lincoln National Corp., which oversees more than $80 billion in assets. "The retailers may potentially discount more than they need, to bring in traffic that was going to come in anyway."
Shares of Cincinnati-based Federated rose 70 cents to $28.92 at 4:03 p.m. in New York Stock Exchange composite trading. Bentonville, Arkansas-based Wal-Mart rose 63 cents to $50.79.
Christmas is Wednesday. Some analysts expect tomorrow to be the busiest holiday-shopping day so far.
The average shopper had completed about 49 percent of his or her planned holiday spending as of Dec. 12, according to a National Retail Federation survey of more than 7,000 consumers. Almost one-third had completed 10 percent or less.
"I buy what hits my eyes and I like," regardless of price, said Joe Donahue, 34, a sales manager from East Norriton Township, Pennsylvania, who said he was almost done with his list. He had purchased a bracelet, a necklace and earrings for his wife at the Tiffany & Co. store at the King of Prussia Mall in King of Prussia, Pa.
Same-store sales may increase as much as 3.5 percent in December and could be better if there is a last-minute surge in shopping, said Bank of Tokyo-Mitsubishi Ltd. economist Mike Niemira, who has been tracking the retail industry since 1984.
Sales in the combined November-December period are expected to increase 2.5 percent, according to the bank, which bases its index on results from about 80 publicly traded retailers. Same-store sales exclude results from new and closed stores.
Jewelry and electronics have featured prominently in retailers' advertisements this season. May Department Store Co.'s Lord & Taylor is offering 50 percent off fine jewelry, plus an extra 15 percent off diamonds and precious stones. Best Buy Co., the largest U.S. consumer-electronics merchant, is selling Kenwood home-theater systems for about $300.
Retailers such as Wal-Mart noted later-than-usual purchases of holiday decorations, suggesting consumers are putting off buying as long as possible. That may provide the boost companies are waiting for, analysts said.
"The later a shopper waits, the more likely they are to ignore their budgets," said Paul Dottle, senior vice president of retail industries for American Express Co.
Merchandise that remains on shelves after Christmas probably will be discounted sharply so new products can be moved in. Retailers often rely on the week following Christmas to make up for any shortfalls in sales as shoppers scout around for additional bargains.
