Sluggish Sales Result in Price Cuts
With a week left until Christmas, merchants _ faced with sluggish sales _ deepened discounting this weekend in what is turning out to be a nail biter of a season. But retailers quietly told analysts Sunday their efforts may not have been enough to meet the weekend’s sales goals.
And that means they may have trouble meeting their sales targets for the season.
Meanwhile, shoppers, many of whom have delayed the bulk of their holiday shopping until this past weekend, were out in malls and on Main Street, snapping up bargains, from discounted leather coats to scooters.
``Yeah, those Razor scooters at Toys R Us were 89 bucks,″ said Stephanie Savage from Pacific Palisades, Calif., who was carrying several bulging bags from Sears, Roebuck & Co. over her shoulder. She found the bargains at Santa Monica Place.
``There are a lot of sales going on today with lower prices than after Thanksgiving. Like at Robinsons-May, you get 15 percent off just by using your credit card. You don’t need coupons...I think today they really cut prices,″ she said.
Eleanor Lombardi, 50, from Cranston, R.I., was holiday shopping at Bloomingdale’s in Manhattan.
``You are getting a lot more for your money than last year,″ she said. ``Bloomingdale’s had 30 to 70 percent off of items all over the store. I am getting sweaters 50 percent off.″
Throngs of shoppers braved snowy roads and unplowed parking lots for deals at Kohl’s department store in the St. Paul, Minn. suburb of Woodbury.
``I started a couple of weekends ago, but this is my serious day,″ said Dan Winterbauer.
``There are lots more 50 percent discounts,″ Shirley Moyer said.
Bucking the trend was Beth Kelhoffer, 26, a Macon, Ga., lawyer, who finished her Christmas shopping but accompanied a friend to Target in Atlanta.
``Most people wait too long to get started,″ she said. ``I don’t want to buy just anything. I really try to find the perfect gift. I shop for Christmas all year long.″
The increased promotions may be good for consumers, but not so great for retailers, which were forced to further cut prices to as much as 60 percent at the risk of hurting profits.
Even Christmas tree ornaments, which normally don’t go on sale until after the holiday season, were in the sales bins, observed Karen MacDonald, communications director at Bloomfield Hills, Mich.-based Taubman Centers, which operates 27 malls in 12 states.
John Konarski, vice president of research at the International Council of Shopping Centers, noted the price cuts this weekend were deeper than a year ago. Victoria’s Secret, for example, discounted selected items by 40 percent, while housewares chain Lechters Inc. marked down a number of items by 50 percent.
``Last year, retailers were willing to take a chance,″ he said. ``This year, they’re not.″
Merchants were already bracing for a difficult and delayed season because of a number of factors.
Stock market volatility and a slowing economy have made consumers skittish about buying discretionary items. And a 31-day shopping season, which is two days longer than normal, is also encouraging last-minute shopping.
These same factors have also ``taken the froth″ out of holiday Internet sales, according to Ken Cassar, an analyst at Jupiter Research, who estimated that e-commerce sales in November and December will just about match sales expectations of $11.6 billion, from last year’s $7 billion. The woes of eToys Inc. is the latest example of the harsh e-tailing climate. On Friday, the toy site said it will cut its work force and may run out of operating cash by the end of March due to weak holiday sales.
Konarski said he never expected holiday sales for retailers to be this dismal. Sales at specialty stores in the nation’s malls have declined 6.2 percent since the Thanksgiving weekend, according to the International Council of Shopping Centers. It is expected to release more recent data on Monday.
Several major retailers, including Wal-Mart Stores, are slated to report the weekend’s sales on Monday.
The news so far doesn’t look good, according to Jeff Feiner, managing director at Lehman Brothers, noting that sales for many retailers are ``coming in below expectations.″ ``If they don’t do well this weekend, it’s going to make it harder for them to make it up for the season,″ he said.
Stores got bruised by the snowstorms and sleeting rain that hit the Midwest this week, he said. In addition, the unseasonably warm weather on the East Coast this past weekend hurt outerwear and other heavy winter apparel.
Michael Gould, chairman of Bloomingdale’s, said he was pleased with sales on Saturday and Sunday, but is nevertheless looking at the seven days following Christmas to give this month’s sales a bounce.
``It continues to gain more importance,″ he said.