Byline: Jennifer Weitzman
NEW YORK -- Most retailers couldn't even get a break in the week after Christmas.
For the past several years, that's become a bigger and bigger sales and clearance period, sometimes helping to salvage the holiday season and put a positive spin on the new year. That really wasn't the case last week, aside from a few chains like J.C. Penney Co., Wal-Mart and Kmart, that did exceed plan last week.
According to a flurry of post-mortems on the holiday season issued Tuesday from retail analysts, in advance of this Thursday's monthly sales announcements, the lights never really lit up at any time in December. And last week's snowstorm was the final blow, after the crushing impact of the last year's plunging stock market, rising heating costs and lack of fashion excitement.
"The holiday sales were doomed the minute that 1999 was completed, which was the mother of all Christmases," proclaimed Richard Church, broadline analyst with Salomon Smith Barney.
Still, while Penney's, Wal-Mart and Kmart during conference calls with analysts reported that sales for the post-Christmas week in 2000 were above plan, Wal-Mart and Kmart did say that business fell below plan for December.
Penney's reported that it expected its department stores for the fifth week of December to be slightly above plan, calling for a decrease in the low- to mid-single-digit range for the month. The chain said post holiday sales were strong, but promotional, adding that good performances came from women's accessories and men's and children's apparel. Catalog sales had a mid-single-digit decrease, slightly below plan.
At Sears, Roebuck & Co., the final week's comp-store sales are expected to be lower than originally projected. Federated Department Stores' sales were soft all month, leaving it below plan.
While hopeful for a rally in the week after Christmas, most department and specialty stores experienced decent enough foot traffic, but not enough transactions to lift them from the malaise of previous weeks. With December sales largely below plan, many retail analysts lowered their fourth-quarter expectations.
Shari Schwartman Eberts with J.P. Morgan, said she is looking for "pretty disappointing results given that performances by many broadline retailers were below plan for the first four weeks of the month."
Still, some retail analysts said they expect there would be some warm spots, including American Eagle Outfitters, Pacific Sunwear, The Limited and Kohl's.
Jeffrey P. Klinefelter, with U.S. Bancorp Piper Jaffray, characterized December sales as "below plan for most people."
He noted that bad weather around the nation as well as a lack of key apparel items prevented retailers from gaining ground. "There was generally a lack of interest and [consumers] bought what they needed, even with all the promotions," he said. "If you don't have the right product, apparel is not the kind of commodity where people snap it up just because it is on clearance."
Church said most chains missed their December sales forecast. "Federated, May, Sears, Target, Kmart and Wal-Mart missed their plans," and his own forecasts as well. The Salomon Smith Barney broadline index is forecasted for December sales to increase 0.7 percent compared with a 6.4 percent gain last year.
Still, he said the bad environment could be good news for the group since it would force "rationalizations," including reduced square footage and more realistic expansion plans. He pointed to the Wards and Bradlees liquidations as positives for the group in the long term.
Maura Hunter Byrne, a softline analyst with Salomon, said most stores in her group missed their original plans. The slow start to December, which typically comprises 50 percent of fourth-quarter sales, led to the highly promotional environment. She said that she blamed the lack of a new fashion looks as well overabundance of cashmere, sweaters and leather, for much of the price slashing. The December softline index is expected to be in the range of a negative 1 to plus 1 percent, from a 4.6 gain last year.
Todd Slater with Lazard Freres said December comps probably would not meet expectations. "Based on our anecdotal observations of mall traffic, we believe December sales will not meet even our reduced expectations. The reduction in store traffic appears to be universal, affecting specialty stores, discounters and broadlines alike," he said.
This view is supported by data from TeleCheck Services, Inc., a check acceptance company and subsidiary of Atlanta-based First Data Corp., which reported that the rate of growth in transactions made by checks during the holiday period halved to 3.1 percent from 6.2 percent last year.
Sluggish sales and deep promotions should put pressure on fourth-quarter results, analysts agreed, adding that they expect heavy promotions to continue into January, as retailers hope to clear inventory before layering on new spring receipts.
Byline: Jennifer Weitzman