Stores slashing prices even more
Posted on Thursday, December 27, 2007
NEW YORK — The nation’s retailers slashed prices further Wednesday in hopes that a post-Christmas shopping rush will salvage sales that, so far, have fallen below even modest expectations.
In particular, the merchants are waiting for legions of shoppers armed with gift cards to snap up bargains and buy fresh new merchandise that just hit store shelves.
Merchants in past years have received a late bounce during big clearance markdowns, and they find themselves again in the position of hoping that bargain-hunting consumers will come through in the end.
Investors, however, grew pessimistic about this Christmas season as well as the financial well-being of consumers in a challenging economic environment. Shares of most retailers fell Wednesday, led by Macy’s Inc., which sank as much as 5 percent in afternoon trading.
“Shoppers are thinking twice about what they are buying,” said Jennifer Black, president of Jennifer Black & Associates, an equity research company in Lake Oswego, Ore. “There’s a feeling of worry.”
Black, along with other analysts, made the rounds at malls in Oregon and New Jersey and noted that even with gift cards, shoppers remained tightfisted Wednesday as they focused on bargains despite fresh offerings from merchants.
“My son gave me gift cards for clothes, and I get up with the birds, so I figured I’d get the most with my money,” said Susan Depetris, who was loading discounted pants and sweaters into a cart at Kohl’s in Medford, Mass. She didn’t plan to look for gifts for anyone else. She had just one person on her mind while she shopped — herself.
Best Buy isn’t offering any special after-Christmas deals, said Sandra Ewing, assistant manager of the electronic chain’s west Little Rock store. However, the store stayed busy Wednesday, she said, and lots of customers came in with gift cards. “We always have quite a few gift cards purchased,” she said. “Yeah,” Ewing added, after conferring with an associate. “Apparently it’s been crazy.”
The pace of shopping the day after Christmas in Northwest Arkansas seemed to depend on the store’s location and the kind of goods for sale.
While foot and car traffic was noticeable in the outdoor mall at the Pinnacle Hills Promenade in Rogers, a little farther away at the Shoppes of Pinnacle Hills, fewer shoppers were walking from store to store in the rain.
Cindi Suchecki, owner of a tabletop accessory and invitation store, RSVP of Pinnacle Hills, said shoppers from the nearby Embassy Suites hotel helped make her second retailing season better than the first.
But, because of the kinds of products in her store, RSVP is not as likely to get the hustle and bustle that a department store would get the day after Christmas, she said.
In Fayetteville the owner of specialty gift and toy retailer Melody’s Choices, reported brisk sales on a day when accidentally opening up an hour earlier than the Northwest Arkansas Mall, proved a welcome decision.
Melody’s Choices, founded in 1970, operates two specialty gift and toy stores, one in Fayetteville and the other in Rogers at the Promenade.
Owner Steve Melody said that even though his Fayetteville store filled up upon opening at 8 a. m., this year’s sales have been about the same as last year’s.
“All of our Christmas stuff is half-off, so people take advantage of that,” Melody said.
Target Corp. warned late Monday that its same-store sales might decline for December. Meanwhile a broad gauge of consumer spending released by MasterCard Advisors, a division of the credit-card company, that includes estimates for spending by check and cash, reported on Tuesday an increase of 3. 6 percent from Nov. 23 to Dec. 24, the low end of expectations. That compared with a 6. 6 percent gain in the year-ago period. Excluding gas purchases, sales for the period were up only 2. 4 percent.
“The ingredients were not there for a blockbuster season,” said Michael McNamara, vice president for research and analysis of MasterCard Advisors. “And retailers in many respects got the most out of the season that they could, based on the environment.”
Higher gasoline prices, an escalating credit crisis and a housing slump made shoppers cautious as manifested in weakening sales growth throughout the year, McNamara said. Shoppers jammed stores at the start of the season but held out for deals through most of December only to return for a last-minute spending spree when the bargains were even better.
To spur business, stores early discounted aggressively, raising concern over retailers’ profit picture during this crucial period. Christmas accounts for up to 30 percent of stores’ annual sales. For toy sellers, Christmas business accounts for as much as 50 percent.
A better tally of how retailers fared won’t arrive until at least Jan. 10, when major merchants report final same-store sales figures for December. Merchants are due to report fourth-quarter profits in February.
The biggest loser is women’s apparel, which has been one of the weakest performers and will see its profits hit hard, analysts said. Signs show that the luxury business could be softening, too. At Houston’s upscale Galleria mall, the luxury menswear store Bernini was empty despite large 70-percent-off signs.
“People are spending less, and they’re being really picky,” said salesman Cleveland Mc-Makin, who called it the worst season in his three years at Bernini.
Even $ 995 leather jackets marked down to $ 299 and $ 595 blazers being sold for $ 179 did not spark optimism.
“We’ve never marked stuff down this low before,” McMakin said. “We’re just trying to sell it.” Information for this article was contributed by Anne D’Innochenzio, Susan Haigh, Dale Wetzel, Deanna Martin, Melissa Trujillo and Liz Austin Peterson of The Associated Press and by David Irvin, Laurie Whalen and Laura Stevens of the Arkansas Democrat-Gazette.
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