January 5, 2005 in Business

Post-holiday sales come at a price

Associated Press
 
Associated Press photo

A shopper takes a break from holiday shopping recently in Mesa, Ariz. Consumers were stingier than usual this shopping season, analysts said.
(Full-size photo)

A shopping spree before and after Christmas helped many of the nation’s retailers meet their holiday sales goals, but heavy discounting to lure customers into the stores came at the expense of profits, Wall Street analysts believe.

“Overall, it was a marginally disappointing holiday in terms of profits, but it wasn’t a disaster because you had a big surge in post-holiday traffic,” said John D. Morris, an analyst at Harris Nesbitt, an investment firm. “It was a holiday season marked by a stingier consumer who wanted to wait until the last minute for the markdowns.”

Morris noted that gift card redemptions and people buying items for themselves, though at reduced prices, helped boost holiday sales. Gift cards are only recorded as sales when they are redeemed.

Ken Perkins, an analyst at RetailMetrics LLC, a research firm in Swampscott, Mass., said the retail industry will probably see the weakest profit gain for the year in the fourth quarter, which for retailers is over at the end of January.

Based on 138 retailers he follows, the retail industry is averaging profit growth of 8.9 percent for the fourth quarter, versus the year-ago period when it averaged 14.7 percent. This year’s figure is down from 10.2 percent right before Thanksgiving. But Perkins believes it could slip into the 7 percent range, after retailers report December sales figures on Thursday.

The sales figures are based on same-store sales, or sales at stores opened at least a year, and are considered the best measure of a retailer’s health.

The International Council of Shopping Centers, the leading shopping center organization, reported Tuesday that same-store sales rose 4.6 percent for the week ended Jan. 1, from a year ago. That was the strongest gain since June 19, when the increase was 4.9 percent. Same-store sales rose 0.2 percent from the prior week.

ShopperTrak, which tracks total sales at more than 40,000 retail outlets, said total sales for the week ended Jan. 1, rose 55.6 percent, compared with the same period a year ago.

© Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email