Retail Decisions to Double From Here

Retail sales topping '03 holidays
Bloomberg News


Sales surged at U.S. retailers in the final days before Christmas, making up for weaker results earlier in December and keeping stores on course for a gain of as much as 3 percent during the holidays.
Holiday shoppers poured into stores to buy last-minute gifts as retailers including Sears, Roebuck & Co. and Federated Department Stores Inc.'s Macy's offered discounts of up to 70 percent.
Sales at stores open at least a year rose 4.3 percent in the week ended Dec. 25 compared with a year earlier, according to the International Council of Shopping Centers-UBS weekly index released Tuesday.
The increase was the biggest weekly gain since July and more than the 2.9 percent average rise for the four prior weeks. Colder weather in the Northeast and demand for luxury items bolstered sales, and gift cards will boost results this week, said analysts including Daniel Barry at Merrill Lynch.
"It truly was a year of last-minute shopping, and we believe that was primarily driven by consumers interested in waiting for the best deals possible," said Wendy Farina, equity strategist at consulting firm Kurt Salmon Associates in New York.
About a third of consumers were shopping later in the season compared with last year, according to an ICSC-UBS survey. About 70 percent of customers still had some shopping to do as of Dec. 19.
Until last week, warmer weather had damped sales of apparel including sweaters and coats, and high gasoline prices squeezed lower-income shoppers. They became more confident about jobs and prices as it got closer to the holiday, said Michael Niemira, chief economist at New York-based ICSC.
"It was a very strong finish to the Christmas season," Niemira said. "The 24th was a very big day."
Sales in the November-December period are expected to rise 2.5 percent to 3 percent, compared with a 4 percent gain a year ago.
Sales of luxury items at retailers including Neiman Marcus boosted results as shoppers sought out jewelry and designer clothes. Purchases valued at more than $1,000 rose 14 percent, according to MasterCard Advisors' SpendingPulse report. Sales between $500 and $999 increased 6.6 percent.
"We continue to expect luxury to outperform as the high-end customer is benefiting from appreciation in the stock market and housing prices and is not materially impacted by high gas prices," UBS analyst Linda Kristiansen wrote.
November same-store sales rose 6.6 percent at Neiman Marcus and 3.1 percent at Nordstrom Inc. Sales at Wal-Mart Stores Inc. rose a less-than-expected 0.7 percent.
Wal-Mart, the world's largest retailer, said Monday that December sales are rising about 2 percent. The company's forecast for a gain of 1 percent to 3 percent is lower than the 4.3 percent increase in December 2003.
Lower income shoppers have pared budgets amid higher energy and food costs and concerns about jobs, said investors including Maria Azari, who helps manage about $3.25 billion at Cambiar Investors in Denver, including Target Corp. shares.
"You just had a lot of things going on," Azari said.
Retailers will likely be helped this week as shoppers seek out after-holiday sales and use gift cards they received. Gift cards can't be counted as revenue until they are redeemed.
Gift-card sales may have risen to more than $20 billion, topping forecasts, Niemira said. Gift-card sales may have accounted for 11 percent of holiday expenditures, more than his earlier forecast an increase of 8 percent to 10 percent. About 25 percent of gift cards may be redeemed this month, Kristiansen wrote in a report.
"I'm doing a lot of my holiday shopping after Christmas," said Soraya Hopkins, 37, an elementary school teacher from Los Angeles who was shopping at Macy's at Beverly Center with her 14- year-old daughter Sunday. "You find better sales."
The retail trends this holiday season include an increase in electronics sales. "We have seen a shift in what consumers are buying," Niemira said. "Electronics are the key purchase and apparel less so. There is also a shift toward more online purchases and gift cards."