In addition, a bunch of other chains that typically only release results quarterly will provide insights into holiday performance over the next week or so, including Best Buy, GameStop, Tiffany, Toys ‘R’ Us and Urban Outfitters.

In anticipation, we will be hosting a free live conference call tomorrow morning at 11:30 to preview December comps and talk about our observations regarding the holiday retail season. See details below if you are interested in joining, or check back later tomorrow for a recording of the call.


Conference Call Details

Time: Wednesday, Jan 4th 11:30AM EST

Dial-In: (218) 632-0550

Participant Access Code: 621797#

The ICSC reported that chain store sales rose 0.9% from the prior week and increased 4.5% over the prior-year period during the week ending Dec 24th, and continues to expect an overall November-December gain of 3.5% in shopping center-related sales.

“As expected, holiday shopping went down to the wire as consumers took advantage of the full shopping week ahead of Christmas Day, which fell on a Sunday this year,” said Michael Niemira, ICSC’s vice president of research and chief economist. ”Overall this holiday season appears to have been a positive one for retailers, though there were some pockets of weakness. Looking ahead, the ICSC-Goldman Sachs consumer tracking survey suggests that consumer gift-card expenditures were higher than in recent years, which suggests gift-card redemption in the coming weeks could be stronger than in recent years too.”

Over the entire holiday season, consumers estimated that about two‐thirds of their purchases were in a store (62.4%), about one‐third (34.3%) was purchased online and 3.3% was purchased through a catalog.

E-commerce sales were the consistent bright spot throughout the season, with comScore reporting this morning that online holiday spending through Dec 26th jumped 15% to $35.3 billion compared to the same period in 2010. Led by $1.25 billion spent on Cyber Monday, ten shopping days surpassed $1 billion in sales.

The Johnson Redbook Index also showed strength last week, rising 4.3% over the prior year as last-minute shoppers flocked to the stores on the day before Christmas. However, as we have been talking about since early November, warmer weather continues to be a drag on winter-related merchandise.

“With unseasonably warm temperatures across much of the country, sales of winter apparel were slow. Some retailers have selectively marked down outerwear and other winter items, often in addition to preplanned promotional discounts, and profit margins are expected to be under pressure due to this highly promotional environment.”

The good news is that most chains were extremely cautious heading into the holiday season, as the inventory-to-sales ratio in October for non-automotive retailers was the lowest ever recorded. Unfortunately, many retailers will still feel the pinch due to extremely competitive pricing pressure, the cost of offering free shipping and higher input costs.

As we witnessed yesterday in the news out of Sears that same-store sales slumped 5.2% and they will be closing 120 stores to raise cash and recent results reported from Best Buy, it was not a merry Christmas for all retailers.

We will get a better read on holiday results when over 30 major chains report results during the first week of January.


Wednesday’s Reading List:

• What Costco CEO James Sinegal Can Teach You About Management (American Express)
• Online Retailers Hone In on a New Demographic: The Drunken Consumer (NY Times)
• After a lost decade of fashion missteps, can The Gap come back in 2012? (Barron’s)
• Drugstores snatch up market share as they become increasingly popular holiday destination (Boston Herald)
• Shopping-by-tablet was popular this holiday, but retailers weren’t ready (VentureBeat)
• ‘Mismanaged’ Sears Continues to Lose Customers to Rivals (Bloomberg)
• Holiday season gives birth to new types of shoppers (Boston Globe)
• U.S. M-Commerce Sales To Reach $11.6 Billion In 2012 (Retail TouchPoints)
• In defining moment for Canadian retail, Target readies 135 stores north of the border for 2013 (Globe and Mail)
• Lost Money: $41 Billion In Gift Cards Haven’t Been Redeemed Since 2005 (NPR)
• Higher prices account for most of holiday sales gain (USA Today)
• Holiday E-Retail Satisfaction Index: Customers Less Price Sensitive in 2011, Gap and Overstock Struggle (ForeSee)

• Our channel checks as of today indicate a softening of sales and in particular considerable pressure coming from the women’s space across all departments from moderate through contemporary.
• The warm weather has only compounded the pressure in this zone. Our previous notes have indicated the weakness in the outerwear space and we believe this will continue to spread across additional cold weather categories. It will be interesting to see how aggressive discounting gets in this channel becomes after Christmas.

Specialty Chains

• Express (EXPR) - This is a name we continue to believe in due to the space it has carved out in the 22-30 year old deomgraphic. As of Wednesday, the sweater promotion of 30% off continues to drive traffic. We love their assortment with particular call out to the fine gauge category, which should allow them to still clear product even with the warm weather.
• Urban Outfitters (URBN) - The Urban brand as the company mentioned in mid-December seems to be experiencing strong sales. The product is different and has a great price-value relationship. The look of the Urban customer is quite unique which will allow them to separate themselves from the “three A’s” (Abercrombie, American Eagle & Aerospostale)…keep reading
  
  Tagged: holiday shopping season, retail trends, storeintel ]]> http://retailsails.com/2011/12/22/storeintel-research-alert-the-final-countdown/feed/ 0 retailsails http://retailsails.com/2011/11/22/tuesday-retail-linkfest-holiday-shopping-edition/ http://retailsails.com/2011/11/22/tuesday-retail-linkfest-holiday-shopping-edition/#comments Tue, 22 Nov 2011 19:27:20 +0000 RetailSails http://retailsails.com/?p=23425 ]]> The Holiday shopping season officially kicks off this week with Black Friday and Saturday, which ShopperTrak forecasts will be the 1st and 6th busiest shopping days of the November-December period. It seems retailers have been heavily promotional earlier than usual this year, and with increased costs we expect margins will suffer as a result in the fourth quarter.

  Projections for overall Holiday retail sales growth range from flat to a gain of 6.5%. Last year, November-December sales (excluding autos, gasoline & restaurants) rose 5.2% to $452.95 billion after consecutive drops in 2009 and 2010, and were just slightly more than the peak of $452.45 billion reached in 2007.

  

  We are forecasting a rise of about 3% to $466.5 billion, which sounds like relatively strong growth considering the backdrop of the economic environment and consumer mood. However, when you consider that annual inflation is running about 3%…well shoppers may be spending more, but they’re not buying more!
  
  
  Holiday Retail Reads:

  • Holiday Sales Expected To Increase 2.8% To $465.6 Billion (NRF)
  • What’s in store for consumer spending this season? More bark than bite? (Deloitte)
  • Holiday shoppers plan to spend less this year (America’s Research Group)
  • Holiday Gift Budgets Get a Bump, But Consumers Won’t Abandon Money Saving Ways (American Express)
  • Small Rise for Holiday Retail Sales: Value-for-Dollars Rules (Brand Keys)
  • Mobile Device Retail Traffic to More Than Double This Holiday Season (IBM)
  • 2011 U.S. Holiday spirit recommences as shopping-center sales expected to rise 2.2% (ICSC)
  • Holiday Retail Outlook: Is This Holiday The Ghost of Christmas Past? (NPD Group)
  • Retail Shows Resilience Despite Economic Woes, Holiday Sales to Rise 3% (FTI Consulting)
  • Survey Says Smart Spending Top of Mind This Holiday Season (Visa)
  • Affluent Consumers Plan To Spend $1,000-Plus During The Holidays (Forbes Insights)
  • Global Holiday Shopping: Books, Clothing and Tech to Crowd Santa’s Sleigh (Nielsen)
  • U.S. Retailers Forecast 2.9% Increase in 2011 Holiday Sales (BDO)
  • Americans Plan To Shop ‘Til They Drop This Holiday Season (Consumer Reports)
  • Online holiday spending to jump 15% on deals & promotions, free shipping & mobile (Forrester)
  • Survey projects increase in mobile & online shopping this holiday season (PriceGrabber)
  • Holiday sales to rise 6.5%, best since 2004 as shoppers defy the experts (Customer Growth Partners)
  • Consumers Plan to Slightly Increase Their Budgets This Holiday Season (Discover Financial)
  • Retailers Must Determine How to Retain Customers While Dealing with Rising Costs (Accenture)
  • More Retail Sales, but Fewer In-Store Shoppers This Holiday Season (ShopperTrak)
  • Shopping cart totals, free shipping offers, coupons top consumers’ holiday wishlists (Shop.org)
  • Cyber Monday Sales to Increase 12.4% as Consumers Continue to Move Away from Brick-and-Mortar Shopping (IBISWorld)
  
  Tagged: consumer spending, holiday shopping season, holiday spending, retail sales ]]> http://retailsails.com/2011/11/22/tuesday-retail-linkfest-holiday-shopping-edition/feed/ 0 retailsails Holiday Season Retail Sales http://retailsails.com/2011/01/07/2010-holiday-retail-season-wrap-up/ http://retailsails.com/2011/01/07/2010-holiday-retail-season-wrap-up/#comments Fri, 07 Jan 2011 21:24:11 +0000 RetailSails http://retailsails.com/?p=12138 ]]> While there are still several retailers who won’t report Holiday sales until next week (Tiffany, Bed Bath & Beyond, etc.), we decided to put together a complete summary of 2010 Holiday season (Nov-Dec) performance for all the retailers (and their respective brands/segments) who have so far released data. Enjoy!
  
  
  
  
  Tagged: holiday shopping season, retail sales, same-store sales ]]> http://retailsails.com/2011/01/07/2010-holiday-retail-season-wrap-up/feed/ 0 retailsails Share/Save/Bookmark 2010 Holiday Season (Nov-Dec) Retail Sales http://retailsails.com/2010/12/16/retail-holiday-season-expectations-continue-to-rise/ http://retailsails.com/2010/12/16/retail-holiday-season-expectations-continue-to-rise/#comments Thu, 16 Dec 2010 19:30:29 +0000 RetailSails http://retailsails.com/?p=11039 ]]>
  After better-than-expected November results and continued strength in retail spending through the first few weeks of December, the National Retail Federation, International Council of Shopping Centers and ShopperTrak have all raised their projections for holiday season retail sales gains. Year-on-year increases are now expected to be the highest in at least 4 or 5 years.

  The National Retail Federation (NRF) now expects holiday retail sales to grow 3.3% from 2009, up from their previous forecast of a 2.3% rise.

  “The start to the holiday season has surpassed all expectations,” said NRF President and CEO Matthew Shay. “While employment data is still a concern, we are starting to see improvement in other economic indicators that support an increase to our forecast. In order to sustain this momentum for retailers and the U.S. economy, there must be a renewed focus on jobs as we enter the new year.”

  While still below peak spending levels from 2007, the 3.3% gain would represent the best YoY increase since 2005:

  
  
  
  
  

  	Holiday Retail Sales (billions)	YoY % Chg
  2010*	$ 451.40	3.3%
  2009	$ 437.02	0.4%
  2008	$ 435.19	-3.9%
  2007	$ 452.79	1.8%
  2006	$ 444.70	3.1%
  2005	$ 431.45	5.5%
  2004	$ 409.14	5.9%
  2003	$ 386.28	4.7%
  2002	$ 368.77	1.3%
  2001	$ 364.12	3.4%
  2000	$ 352.16	2.3%
  1999	$ 344.20	8.1%
  1998	$ 318.42	5.8%
  1997	$ 300.87	4.2%
  1996	$ 288.65	3.5%
  1995	$ 278.83	3.1%
  1994	$ 270.42	7.1%
  1993	$ 252.53	5.9%
  *projected source: NRF & U.S. Dept. of Commerce NRF defines “holiday sales” as retail industry sales in the months of November and December. Retail industry sales include most traditional retail categories including discounters, department stores, grocery stores, and specialty stores, and exclude sales at automotive dealers, gas stations, and restaurants.

  “Consumers have not been suffering from a lack of spending power, they’ve just been missing the confidence to use it,” said NRF Chief Economist Jack Kleinhenz. “With noticeable improvement in key economic indicators combined with great deals on merchandise, consumers have certainly shown they shouldn’t be counted out this holiday season.”

  While using a different measure of retail sales, The International Council of Shopping Centers (ICSC) also raised their forecast and expects gains to be the best in 5 years. They now project same-store sales to rise 3.5% to 4.0% for the November-December period, up 0.5% from their previous forecast. Also, GAFO store sales are expected to rise 3.7% and shopping center-related sales should rise 4.2% (both 1.2% higher than previously forecast)

  Commenting on weekly sales results, ICSC director of research and chief economist Michael Niemira said ”Sales rose both on a year-over-year and on a week-over-week basis as consumers stepped up their holiday gift purchases with the ICSC-Goldman Sachs Consumer Tracking Survey showing that the average holiday-gift completion rate rose from 40.1 percent last week up to 56.6 percent this week,”

  “That is a rather impressive increase over the past two weeks, but consumers are still a tad below last year’s pace and noticeably below two-years ago, which suggests a stronger late-buying rush over the next two weeks,” Niemira added.

  Meanwhile, ShopperTrak again raised its guidance for the holiday season, now expecting a sales and traffic increase of 4.0% and 1.8% over last year, compared to a previous estimate of 3.2% and 1.0%, which were already up from their initial prediction of a 2.9% sales gain and 0.1% traffic decrease.

  “Looking ahead, retailers will be paying close attention to the week leading up to Christmas as this is the period that annually boosts December performance and provides a real bookend to the holiday shopping season,” said Bill Martin, co-founder of ShopperTrak. “Typically the 10 days prior to Christmas accounts for 31 to 34 percent of total holiday sales, so winning retailers will have the appropriate deals and promotions in place to drive traffic during this period to assure a healthy holiday season.”

  Retailers are doing all they can do attract last-minute shoppers, including pulling all-nighters – Toys R’ Us will stay open 88 straight hours leading up to Christmas. However, consumers will still be relatively cautious with their spending until the employment picture perks up, so it will likely be another year at least until spending returns to pre-recession levels.

  
  Tagged: holiday shopping season, icsc, national retail federation (nrf), retail sales, shoppertrak ]]> http://retailsails.com/2010/12/16/retail-holiday-season-expectations-continue-to-rise/feed/ 0 retailsails Share/Save/Bookmark Holiday Season Retail Sales http://retailsails.com/2010/12/15/retail-news-of-the-day-1215/ http://retailsails.com/2010/12/15/retail-news-of-the-day-1215/#comments Wed, 15 Dec 2010 16:19:34 +0000 RetailSails http://retailsails.com/?p=11003 ]]>
  • Online holiday retail sales are up 12% from 2009 through Dec. 14th (comScore)
  • Holiday Bargains Help Entice Shoppers, Though Majority Still Have Half Of Their Lists Left (NRF)
  • McDonald’s Corp. is planning its biggest ever expansion in China as it faces mounting challenges from competitors and higher food costs amid rising inflation (WSJ)
  • Shopper satisfaction suggests that online retail sites are performing much better than last year (ForeSee)
  • Today J.C. Penney became the first major retailer to make its entire catalog available to shoppers within Facebook—not just to peruse, but to buy (Fast Company)
  • Shoppers ignored Best Buy Co Inc’s promotion of pricey 3D televisions and other high-end gadgets this holiday season as they chased bargains elsewhere, hammering the company’s profits (Reuters)
  • Both the International Council of Shopping Centers and National Retail Federation raise their forecasts for the holiday shopping season (ICSC & NRF)
  
  Tagged: consumer spending, holiday shopping season, retail news ]]> http://retailsails.com/2010/12/15/retail-news-of-the-day-1215/feed/ 0 retailsails Share/Save/Bookmark http://retailsails.com/2010/01/19/modest-gains-expected-for-retailers-in-2010/ http://retailsails.com/2010/01/19/modest-gains-expected-for-retailers-in-2010/#comments Tue, 19 Jan 2010 16:27:34 +0000 RetailSails http://retailsails.com/?p=7936 ]]>
  

  After hitting the nail on the head with its holiday season retail forecast, the International Council of Shopping Centers (ICSC) said yesterday they expect retail sales will rebound with a 3.9% increase in 2010. ICSC initially forecast a gain of 1-2% for holiday (November-December) shopping center-inclined sales growth back in September, and the final tally showed a 1.8% gain. The company noted it was not a particularly strong season, but it was better than a lot of analysts predicted and a substantial improvement over the prior year’s 5.6% plunge:

  “Nonetheless, this holiday‐season‐sales performance set the foundation for a stronger 2010 pace of retail spending. ICSC’s outlook for 2010 reinforces this message with a 3.9% expected gain in 2010’s shopping‐center sales growth, following a 2.4% drop in 2009. Although ICSC does not expect sales, anytime soon, to rival the past boom spending years – when sales grew in the 5‐6% range – the 2010 expectation is one marked by improvement in all segments of the industry as the recovery continues to gain steam. Let the recovery roll on!”

  

  This lines up with the projection by Mark Zandi, chief economist of Moody’s Economy.com, who said at the National Retail Federation’s Annual Convention that he expects retail sales to rise 3-4% in 2010. He noted that gains will be largely dependent on improvements in the employment and housing markets, but noted that regardless, “The economy is looking measurably better than a year ago, and it will be measurably better a year from now,”

  Normally we are skeptical of predictions, especially in times of such uncertainty, but Mr. Zandi has been extremely prescient about the retail outlook during the recession. Note the testimony he gave before the U.S. Senate Budget Committee regarding the proposed stimulus plan back in November of 2008:

  “More than in past recessions, the financial pain of this recession is being felt by all Americans, from lower-income households losing jobs to affluent households with diminished nest eggs. This is evident in the sharply weaker sales at high-end retailers such as Nordstrom, Neiman Marcus and Bergdorf Goodman. Usually the wealth effect is so small that it can be determined only econometrically; now it is potent enough to be apparent visually. Since the housing bubble began to deflate, the link between retail sales and house prices has been striking. Falling house prices appear to curb retail sales with a lag of about six months, as homeowners do not immediately adjust their spending to a change in housing wealth. The current declines in house prices suggest that this Christmas will be as tough for retailers as any since 1992. Moreover, if house prices decline substantially further as expected, then retailers’ troubles will last through Christmas 2009.”

  Compare and contrast this with analysts who have been speaking of “pent-up” demand and anecdotal evidence of a retail recovery, and you can see why we are fans of his fact-based analysis. After an extremely trying 2009, we agree that modest improvement is on the horizon for the retail industry. However, with expectations of an elevated unemployment rate and continued declines in house prices through the middle of the year, don’t expect spending to reach pre-recession levels anytime soon.

  While same-store sales results were seen as relatively strong for most retailers during the holidays, we will get a much clearer picture of performance when companies report fourth quarter and full-year results in the coming weeks. We will be looking closely at margins and profitability, but more importantly will be focusing on expectations and outlooks from executives for the year ahead.

  
  Tagged: consumer spending, holiday shopping season, icsc, retail sales, same-store sales ]]> http://retailsails.com/2010/01/19/modest-gains-expected-for-retailers-in-2010/feed/ 0 retailsails Share/Save/Bookmark Shopping Center-Inclined U.S. Retail Sales Growth