That forced some stores like American Eagle Outfitters Inc. to slash prices on coats and other cold-weather merchandise more than planned. BY ANNE D’INNOCENZIO | THE ASSOCIATED PRESS ADVERTISING NEW YORK — The 2011 holiday shopping season will go down
BY ANNE D’INNOCENZIO | THE ASSOCIATED PRESS
NEW YORK — The 2011 holiday shopping season will go down in the record books as the year the Grinch stole stores’ profits.
Many retailers sacrificed their bottom lines by pushing heavy discounts to shoppers bent on getting a good deal in a challenging economy. That created a sharp divide between stores that won the battle for wallets, and those that didn’t.
The big winners? Shoppers who held out for deals late in the season.
Retailers collectively reported a 3.5 percent increase in revenue at stores open at least a year for December, according to a tally of 25 merchants compiled by the International Council of Shopping Centers. For November and December combined, the figure rose 3.3 percent, a solid increase but still behind last year’s 3.8 percent pace.
The figures are based on revenue at stores open at least a year. That is considered a key indicator of a retailer’s health because it excludes results from stores recently opened or closed.
Retailers depend on the holidays, when they bring in as much as 40 percent of their annual revenue. The season also gives give valuable insights into what it takes to get Americans to spend in the weak economy. Clearly, the rich kept spending, but for everyone else, it took a hot item like Apple’s iPad or right-on exclusive fashions — or a lot of “50 percent” off signs.
Winners included Limited Brands Inc., Macy’s Inc., TJX Cos. and Nordstrom Inc., which posted strong revenue gains that beat analysts’ estimates. Macy’s, Ross and Limited even boosted their earnings outlooks.
On the losing side, Target Corp., Kohl’s Corp., and J.C. Penney Co. cut their fourth-quarter earnings projections after reporting weaker-than-expected sales. Gap had a big sales decline.
“There’s no question that the divide is getting wider, and will get even wider this year as the winners continue to take share away from rivals,” said Joel Bines, managing director in the retail practice of AlixPartners. “Consumers have limited time, money and attention, and they’re investing in a smaller subset of retailers.”
Retailers will report fourth-quarter earnings next month. The fullest picture of holiday spending will come in next week’s government retail sales report, which captures more categories like home improvement and electronics.
Heading into the season, stores knew it would be challenging to lure shoppers dealing with high unemployment, paltry wage growth and higher basic household costs. So retailers plied customers with free shipping and promised to match rivals’ prices. Walmart Stores Inc. resurrected layaway to help shoppers finance their purchases.
For the semi-official start of the shopping season, stores opened as early as Thanksgiving Day, pushing big discounts that resulted in record sales. But shoppers took a longer-than-usual breather after that early splurge. A mild winter and Christmas falling on a Sunday also encouraged people to wait until the last minute.
That forced some stores like American Eagle Outfitters Inc. to slash prices on coats and other cold-weather merchandise more than planned.
