Retailers hope last minute Christmas shoppers bring good cheer

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Published December 24, 2012

| Reuters

CHICAGO/WHITE PLAINS, N.Y., Dec 24 (Reuters) - Retailers limped into Christmas with last-minute blowout deals on everything from TVs to celebrity-branded clothing, after a disappointing few weeks of sales led many analysts to lower their expectations for the holiday season.

Some industry watchers said shoppers were making smaller purchases, even though they are still visiting stores and browsing online. Since the holiday quarter can account for about 30 percent of annual sales and half of profit for many chains, such small distinctions can be crucial.

"The attitude of the shopper went from Christmas euphoria on Thanksgiving weekend to more subdued, to less frenetic," said Thom Blischok, chief retail strategist and a senior executive adviser with consulting firm Booz & Company's retail practice.

Before the season began, Blischok was looking for sales to rise more than 5 percent in November and December over the same period in 2011. Now, he said a gain of 2 percent to 2.5 percent appears more likely.

Research firm ShopperTrak lowered its forecast last week for November and December sales. It is now calling for an increase of 2.5 percent, rather than 3.3 percent.

"The season will be an OK season, it won't be as strong as last year but it won't be maybe as bad as feared heading into it," said Joseph Feldman, managing director and senior research analyst at Telsey Advisory Group. "Christmas comes every year."

Some of those who are buying said they were holding back.

Terene Collymore, a student of criminology at Monroe College in New Rochelle, New York, was at a Walmart on Monday, buying last-minute gifts, such as knitting supplies for her mother.

Collymore said she was being more careful this year and not spending more on herself.

"I don't throw money away," she said.

CHEAP TELEVISIONS ABOUND

Sales for the November-December holiday season are expected to rise 4.1 percent to $586.1 billion this year after a 5.6 percent increase in 2011, according to the National Retail Federation.

But even with the diminished forecasts, retailers have done a good job controlling inventory levels this season, analysts said.

The iPad mini has been tough to find in some places but is still available, while the new iPhone 5 is still in stock, suggesting that people may have stuck with their prior models or bought the less expensive iPhone 4S instead, said Feldman.

The season has been "decent" but "not exceptional," said Noam Paransky, vice president in AlixPartners retail practice.

He said he has not seen unplanned discounting or too much excess inventory despite slightly slower-than-expected growth.

"Retailers have been disciplined. They haven't hit the panic button yet," Paransky said.

Still, Target Corp slashed the price of its collaborative holiday collection with Neiman Marcus by 50 percent a few days ago. The collection was still marked at full price at Neiman Marcus.

Meanwhile Sears was offering 60 percent off clothing from the reality TV family's "Kardashian Kollection," and Target, Walmart and Best Buy all had last-minute discounts hundreds of dollars deep on big-screen TVs.

AFTER-CHRISTMAS SALES

Superstorm Sandy hit sales in the densely populated Northeast in late October and early November but retailers were able to bounce back weeks later with a strong turnout on Thanksgiving weekend.

Now, fresh concerns about whether Washington will reach an agreement to avert the "fiscal cliff" of tax hikes and spending cuts before Jan. 1 is leading some shoppers to curb spending.

Overall, analysts said inventory levels appeared about right, though consumers' minds have changed since retailers placed orders for items such as apparel back in the spring.

"I don't think it's an issue of ordering too much, I think it's the fact that the consumer has recognized 'I can learn to live with less, I don't have to have that fourteenth sweater, I just don't have to have it,'" said Blischok.

Those retailers who are seeing weakness before the holiday could use after-Christmas sales to sell discounted goods, analysts said. Typically, retailers like to clear out their holiday merchandise quickly, so that shoppers coming in with the gift cards they received are more likely to buy full-price spring merchandise at fatter profit margins.

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