If it's not a deal, no deal

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: December 6, 2007 - 9:37 PM

Holiday shoppers may have waited in the cold morning darkness to snatch up door-busters on the day after Thanksgiving, but afterward, they went home, rebalanced their checkbooks and didn't go shopping again unless they saw a deal too good to ignore.

"Low prices are what's driving consumers to the stores, and incredible deals are what's getting them to buy," said Britt Beemer of America's Research Group, which conducts market research.

The nation's biggest chain stores reported mixed sales results Thursday, as consumers held out for deeper discounts heading into the gift-giving season -- or simply have vowed to spend less.

Minneapolis-based Target Corp. and J.C. Penney disappointed analysts, as hearty Thanksgiving weekend sales couldn't compensate for the frugal mind-set adopted by shoppers.

Target adjusted sales for a calendar shift caused by a leap year in 2008, and reported same-store sales growth of 1.1 percent. It had said it expected same-store sales, a key indicator of a retailer's health, to grow 2 to 4 percent.

Target warned that, if weak sales continue, it won't meet fourth-quarter earnings targets.

Wal-Mart Stores Inc., Kohl's, Macy's and luxury retailers fared better than expected. Wal-Mart's early discounts and heavily promoted Black Friday deals reaped benefits, as did strong sales in grocery and pharmacy. Wal-Mart said same-store sales rose 1.5 percent, nudging out the 1.2 percent forecast by Thomson First Call.

The next couple of weeks will be key for retailers. In retail's typical rhythms, stores like to clear the shelves the week before Christmas without having to resort to deep discounts that cut into profits.

With Christmas falling on a Tuesday, retailers have three weekends to turn on the charm. But it seems that the simple bargain-basement pricing may be what's attracting this season's shopper.

Target's "Wow or Never" promotion campaign, which spanned the final week of November, failed to draw in shoppers, despite sweepstakes giveaways that included a trip to the Galapagos Islands and a guitar lesson with Def Leppard in London. Target CEO and President Bob Ulrich blamed softness that week for the company's lackluster monthly results. Sales were particularly slow in bedding, dinnerware and small appliances, as well as in men's clothing and jewelry.

"It appears Target is being constrained by not getting into the highly promotional environment that's out there right now," said David Brennan, of the Institute for Retailing Excellence at the University of St. Thomas. "They're protecting their margin at this point. But it's getting pretty tough when you're practically alone."

Target won't veer from the promotional plan already in place, spokeswoman Susan Kahn said.

A holiday without toys?

Fallout from recalled toys is "just devastating one retailer after another," Beemer said.

He said Wal-Mart staffed its toy section to handle consumer questions, and also to dominate the bike market, which he predicts will be the No. 1 toy gift this year.

As for Target: "I look at their toy department and where normally you see empty shelves, you see nothing empty anymore."

Retailers benefit from extra post-Thanksgiving holiday selling days (up to nine) in November, but will get stung by fewer days in December. Target's November sales calendar, for instance, includes seven additional post-Thanksgiving days but has six fewer pre-Christmas days to count in next month's sales.

Macy's, meanwhile, said its sales increased 13.4 percent on sales of $2.7 billion, in part because of the calendar switch. Cold weather and strong holiday merchandise also contributed. It is forecasting a dip of 4 to 7 percent in December.

Wall Street gave Target and Wal-Mart different treatment Thursday, even though their sales gains were not so far apart. Investors pounded Target stock, knocking it down 7.6 percent, to $55.57 at day's end. Wachovia analyst Peter Benedict downgraded Target in light of "disappointing" November sales. Wal-Mart shares were essentially flat, closing at $49.27, up 37 cents.

"Obviously the street has higher expectations for Target than they do for Wal-Mart," said Eric Beder, an analyst with Brean Murray Carret & Co. in New York.

Christopher & Banks: The Plymouth-based retailer, posted a 1 percent same-store sales gain for the month. CEO Lorna Nagler said in a prepared statement that the women's retailer is focusing on "maintaining lean inventory levels," and that third-quarter inventories are 15 percent lower than last year's.

At Wilsons the Leather Experts, the specialty retailer posted a 0.4 percent gain, its first positive sales result since July 2005, and the first positive November gain since 2000. Colder weather and a broader offering of accessories and updated lines helped bring in traffic.

Jackie Crosby • 612-673-7335

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close