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Christmas Shopping Season: Not Strong, But No Disaster

December 28, 1987

NEW YORK (AP) _ Wall Street analysts don’t give the Christmas shopping season rave reviews, but it wasn’t a bomb for retailers either.

″It was acceptable to satisfactory, certainly not strong by any stretch of the imagination,″ Monroe H. Greenstein, a retail industry analyst with the investment firm Bear Stearns & Co. Inc., said Monday.

Predictions of a retail calamity following the Oct. 19 stock market crash turned out to be wrong, said Fred Wintzer, who tracks specialty apparel stores for Alex. Brown & Sons Inc. in Baltimore.

″I would say Christmas was OK, relative to the disaster forecasts,″ Wintzer said. ″Most people were looking for the consumers to pull in their horns and that didn’t happen.″

After the crash, many retailers and analysts lowered their expectations for the season. But even before the Wall Street debacle, no one was predicting a banner Christmas because consumers had been spending cautiously all year as they struggled to pay off high debt levels.

Greenstein estimated that overall Christmas sales rose about 6 percent over last year’s holiday season, which works out to an increase of between 1 percent and 2 percent when inflation is subtracted. Wintzer pegged the sales increase at about 5 percent.

Retailers were still tallying their results Monday. Exactly how well they did is not expected to become public until their December sales figures are released next week.

However, it is known that business varied from store to store for much of the season, with some retailers reporting brisk sales while many others running behind 1986 levels.

″The season did come late for most,″ with the bulk of sales ringing up in the last part of the season, said Rick Nelson, an analyst with Duff & Phelps Inc. in Chicago.

That last-minute spurt ″was enough to allow most companies to make their sales budgets for the period,″ Nelson said.

Some stores had a jump of 15 percent in the final week, Wintzer said.

The lateness of the shopping - which is becoming something of a Christmas tradition in itself - forced many retailers to mark their merchandise down heavily to attract customers. In so doing, the stores won the battle for sales, but they lost the war over the bottom line as lower prices eroded their profit margins.

Christmas 1987 was ″poor for margins,″ said Greenstein. ″Fourth quarter profits will be up, but down on a pre-tax basis for a lot of companies.″

But the calendar was on the retailers’ side, Greenstein said, referring to the fact that there was one more shopping day this season than in 1986. The extra day was worth as much as 4 percent of total sales, he said.

The most successful retailers were discount stores, such as K mart Corp. and Wal-Mart Stores Inc., followed by department stores, Nelson said.

Apparel retailers had a difficult season.

″When you take out inflation, they were down for sure,″ Wintzer said of clothing store sales.

But this came as no surprise to the analysts. The stores suffered from the same problems they have had since summer - declining sales because fashion- conscious shoppers did not like the styles.

″The fashion just wasn’t right,″ said Wintzer. ″It didn’t turn the women on.″

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