Holiday Sales Disappoint Optimistic Retailers

Massive retail discounts failed to rescue this holiday season and delivered the most dismal 4th quarter in nearly 40 years. Consumers spent cautiously this year worried about the U.S recession, job losses, and a sinking stock market.

This is a disappointment for companies that had hoped the holidays would offset a year when sales have been sliding steadily, draining profits and, in many instances, undermining the ability to pay down debt. No retail sector was spared. Some sectors hit the hardest were:

Luxury Items -35%

Electronics and appliances -26.7%

Women’s apparel -22.7%

Furniture -20%

E-Commerce -2%

E-commerce showed the most persistence, however it was disappointing compared with last year which showed an increase of 22.4% during the same period.

The season’s dismal results have left stores with mountains of inventory to clear, prompting many to move up their typical January clearance sales earlier to help salvage what they can of the season. Retailers like JCPenny are having door buster clearances starting at 5:30a.m with 70% discounts while luxury retailers like Neiman Marcus are trying to offset the 84% fall in its fiscal 1st quarter with 40% on already reduced merchandise.

200,000 stores are predicted to close this year, which some experts predict will be the most in 35 years, is likely to come across areas from electronics to apparel, shrinking the industry, taking advantage of the long tail of fewer niche players and suppliers. Moreover, retailers soon may face yet another blow. In recent years, they have seen a big lift in post-Christmas sales as shoppers coming back to stores to redeem gift cards often spent more than the card amount to buy full-price merchandise. This year however, shoppers expected to spend only $151 on gift cards this season, a 24% drop from last year. – IR