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USA:Retailers may ''walk'' their way to the banks |
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2004-11-3
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So far so good, the sales at retail outlets are showing signs of cheer and as Richard Hastings, sector analyst at Bernard Sands, a New York City retail credit-rating firm predicts merchants will have a "moderately jolly" holiday season.
According to him, sales for November and December are to rise by 4.75% to 5.25% from 2003 levels. Though a healthy increase, it is not crossing 2003 figures. During the same months last year, sales rose by a handsome 7.6%.
Analysts optimism stems from the fact that this year has two more shopping days between Thanksgiving and Christmas than in 2003. And even more importantly, despite Presidential election, rising fuel prices, terrorism worries, and a so-so jobs market, consumers are spending.
"We haven''t seen any really ugly numbers with respect to consumer spending," says Eric Jemetz, senior equity analyst at New York City asset-management firm Rockefeller Partners.
Working-class Americans suggests a decent season. Wal-Mart said U.S. sales at stores open at least a year (or same-store sales) rose 2.8% in October, which is regarded as a good harbinger for holiday spending, Jemetz says.
Retailers roundup:
The retailers while drawing consumers through last-minute bargain-deals, have preponed their plans much early this season. Hastings observes that mass-merchandiser Target and off-price chain Big Lots already have their Christmas merchandise out on the shelves and are promoting goods normally reserved for the post-Thanksgiving stretch.
Maintaining lean inventories last Christmas, merchandisers had conditioned shoppers to realize today the you see something you like, buy it now, for tomorrow it may not appear on the shelves.
As the Federal Reserve is slowly ratcheting up its benchmark rate, overall interest rates are pretty low by all comparisons. And the result is obvious, "borrowing remains very healthy," Hastings says.
Then, there is no stopping the great American consumer empowered to use his plastic right – the credit card. "There''s not enough [bad news] to stop them," Hastings says. "The energy crisis is not severe enough yet to derail the entire economy."
The personal savings rate was a meager 0.2% in September. This measure of consumer health has been falling for years, but it continues to have little bearing on spending and shouldn''t hurt the holidays.
Hasting says expensive electronics and entertainment gifts will remain popular which should boost Best Buy sales in the quarter. Leather-accessories retailer Coach could log in impressive sales, though like many on the high end, it''s holiday 2003 same-store sales will be tough to beat, Jemetz says.
Forgetting the retail sales debacle of 2003''s holiday quarter teen apparel retailer Abercrombie & Fitch seems to be on a comeback trail disturbing skeptics even more. "They seem to have regained their mojo," Jemetz says. It won''t be hard for Abercrombie to beat weak sales in the year-ago period. Same goes for teen retailer Hot Topic and mid-level department-store chain Kohl''s.
Where do Online retailers stand in all this? Ups and downs of recent Christmases past, online growth has registered clear trajectory. Sales scaled new heights every year since the late ''90s, and there’s no stopping this year too!
November and December online sale will reach $21.6 billion in 2004, up 19 percent from the same period in 2003, according to a new report by e-commerce market researcher Jupiter Research. Rising fuel cost will fuel the growth in this sector, Jemetz says. The lack of a sales tax for online purchases also gives spendthrifts a reason to buy in cyberspace.
Amazon.com the Numero Uno of this segment should have pick superb holiday quarter, according to a consensus of analysts.
But after the storm, what about the lull? Nesbitt Burns senior economist Michael Gregory, at the Bank of Montreal''s equity division, worries about post-holiday blues setting in after the holidays coming to an end. He''s concerned that "the economy is losing some momentum here." Further, winter being not so far, he visions big heating bills to push vulnerable consumers across the board, he says. "My outlook for 2005 is very negative," says weary Hastings.
All said and done, retailers look forward to a season that’s worth the wait! |
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