Look for RTH to continue it's stellar performance.....
Shoppers Flock to Stores as J.C. Penney, Sears Offer Discounts
By Lauren Coleman-Lochner and Heather Burke
Dec. 23 (Bloomberg) -- Shoppers jammed stores to take advantage of half-off sales and extended hours at J.C. Penney Co., Sears Holdings Corp. and Toys ``R'' Us Inc. during the final weekend before Christmas.
Less than one-fifth of consumers had finished their holiday shopping last weekend. Retailers were counting on yesterday and today to generate almost 10 percent of their sales for the gift- giving season, which the National Retail Federation said may be the slowest in five years.
Profit may suffer this year as retailers boost discounts to lure consumers grappling with higher food and energy costs and rising mortgage defaults. The price of gasoline has risen 28 percent this year, according to the U.S. Department of Energy.
``This season has been the year of the discount,'' said Fred Crawford, managing director for Southfield, Michigan-based consultant AlixPartners LLP.
J.C. Penney sold juniors sweaters with 50 percent discounts and winter coats at 60 percent off yesterday. Macy's Inc. is offering special markdowns until 1 p.m. at its stores through this weekend. Sears offered women's pajamas at half price.
Americans are postponing purchases in a gambit to buy gifts at deeper markdowns. ``Consumers who are trying to stretch their dollars are going to wait until the last second to see what they can pick up at a really great price,'' Crawford said.
Yesterday and today may account for 9 percent of all sales from November's Thanksgiving holiday to Christmas, according to Michael Niemira, chief economist at the International Council of Shopping Centers.
Consumer Confidence
Consumer spending in November, the start of the holiday season, rose more than economists forecast, gaining 1.1 percent after a 0.4 percent increase in October, the Commerce Department said last week. The Reuters/University of Michigan final index of consumer sentiment for December dropped to 75.5, the lowest since October 2005.
The rising price of gasoline ``makes a huge difference'' on spending, said Gisell Jeter, 24, a student shopping at the Garden State Plaza in Paramus, New Jersey, yesterday. ``Any extra cash you have, you're spending on gas.'' Customers spent as much as 30 minutes searching for parking spaces at the mall yesterday.
Retailers are responding to flagging consumer confidence by cutting prices. Macy's specials this weekend include deals on jewelry, sweaters and men's coats. It's marking down digital photo frames, men's shavers and grooming kits by more than half in some cases.
Macy's Competition
``Macy's is hurting everyone else with promotions,'' said Christine Chen, an analyst at Needham & Co. in San Francisco. ``It's driving traffic, but we don't know how the margins will do.''
The Cincinnati-based merchant has competition from both ends of the price spectrum.
Boone & Sons Jewelers in the Washington area was selling all its diamond stud earrings at half off, starting at $3,250 and going up to $99,000.
Wal-Mart, the world's largest retailer, introduced toy discounts more than two weeks earlier this year, at the beginning of October, and boosted the number of items it marked down for the season by 20 percent.
Discount and warehouse club chains are larger draws this year as shoppers cut back trips and scrutinize prices to combat higher gasoline and housing costs, said Phil Rist, vice president with BIGResearch in Worthington, Ohio.
``When the economy gets tight, it's the folks in the middle that end up shifting,'' Rist said.
A number of retailers extended hours to cash in on procrastinators. At least seven Macy's stores in New York and New Jersey are remaining open until 6 p.m. Dec. 24.
Longer Hours
Kmart stores, owned by Sears, will be open through 10 p.m. Christmas Eve. Target Corp. lengthened its hours in late November, opening from 8 a.m. to 11 p.m. On Dec. 24, Target will be open for 11 hours until 6 p.m. Wal-Mart, which operates many of its supercenters 24 hours a day, will close at 6 p.m. Dec. 24 and reopen at 6 a.m. Dec. 26.
The New York-based International Council of Shopping Centers has forecast a 2.5 percent year-over-year gain for sales at stores open at least a year in November and December, the slowest since 2004. November same-store sales climbed 3.5 percent, helped by the shift of an extra week of shopping into the month.
The trade group estimates December comparable-store sales will rise 1.5 percent from a year earlier. Sales through Dec. 16 have gained 0.6 percent, less than half the projected pace for the month, said Niemira, the group's economist. ``You need to see a real acceleration this weekend to get even a modest growth of 1.5 percent,'' he said in an interview Dec. 21.
Sales Declines
Sales at U.S. retailers declined three weeks in a row, Chicago-based ShopperTrak RCT Corp. said Dec. 19. ShopperTrak forecast a 3.6 percent increase in holiday sales this year, while the NRF has predicted a 4 percent gain, the smallest since 2002.
Eighteen percent of consumers had completed their holiday shopping as of Dec. 16, according to a telephone survey conducted Dec. 13 to 16 by the shopping center council. The figure was 21 percent in 2006 and 26 percent in 2005.
The Standard & Poor's 500 Retailing Index of 31 members has dropped 17 percent this year, compared with a 4.7 percent gain for the broader S&P 500. |
