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Season Is Shaping Up To Be a Merry One After All

December 12, 1985

Undated (AP) _ More shoppers than expected have streamed into the stores since Thanksgiving, grabbing up toys, home electronics and women’s accessories and buoying the hopes of the nation’s major retailers at the midpoint of the crucial Christmas selling season.

Sales are up 8 percent to 12 percent from a year ago at several companies, compared with the 5 percent to 8 percent that had been forecast, analysts said Wednesday.

″Traffic has been up,″ said Barbara Palazzolo, a spokeswoman at the Troy, Mich., headquarters of K mart Corp., the nation’s second largest retailer.

Duncan Muir, a spokesman for No. 3 J.C. Penney Co. in New York, said: ″Halfway through it looks good.We were optimistic for the season and we continue to be optimistic.

″The Thanksgiving weekend was good. The last week ended Saturday was, I’d say, in line with our expectations, perhaps a little higher.″

The Christmas selling season, which accounts for a large part of retailers’ annual sales and profits, formally begins the day after Thanksgiving. Because Thanksgiving fell on Nov. 28 this year, the season is six days shorter than in 1984 and many retailers and economists feared that might hold down buying.

Consumer spending has been the major force behind the current economic expansion, and analysts said Wednesday they were cheered by the performance after Thanksgiving.

″Business picked up nicely last week,″ said Monroe Greenstein, a retail analyst with the New York investment firm Bear, Stearns & Co. ″At many companies business is at or ahead of plan. Prior to last week, many companies were at or below plan.″

Greenstein added that spending by middle-income consumers had picked up after Thanksgiving.

″They had not been spending for a long time,″ he said. ″Basically, it goes back to the old theory that if you’re going to spend for one time, it’s going to be Christmas.

″It will turn out to be a satisfactory Christmas season.″

Walter Loeb, an analyst with Morgan Stanley & Co., was even more upbeat.

″Christmas sales are strong. I expect them to continue to be strong,″ he said. ″The consumer is spending. He was stimulated by the cool weather and the strong promotions that retailers had planned.″

He predicted a strong Christmas for retailers, barring any major snowstorms.

At K mart, Ms. Palazzolo said consumers seemed be leaning more to the basics this year. For example, traditional clothing is selling much better than trendier fashion, she said.

The retailers also said the stronger sales performance probably will mean fewer price cuts this season, especially with retailers keeping a tighter rein on their shelves than they did last Christmas, when bloated inventories resulted in sharp markdowns.

″There are promotions going on but I wouldn’t put them in the category of markdowns at this point,″ said Penney’s Muir.

The merchandise also is fresher this year than last, retailers said.

As a result, analysts have said, retailers’ profits should fare well in the fourth quarter.

The good news for consumers, Loeb said, is that many items are selling below last year’s prices because there has not been any inflation in general merchandise.

In the toy departments, the best sellers reportedly are bicycles, educational toys, the Teddy Ruxpin talking teddy bear, Voltron and Transfomer action figures, Furskins, Cabbage Patch dolls and Pound Puppies.

Other items reported selling well are home electronics, including videotape recorders and compact disc players; telescopes because of interest in the return of Halley’s comet; sweaters; women’s blouses and dresses; women’s accessories; and men’s pants and sport shirts.

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