Retail Tally Of Holiday Shopping 2013 Comes Up Light
Retailers capped the holiday shopping season on a bit of a cheery note, discovering that many shoppers simply waited until they were down to the wire to rev up the spending pace.
But overall the industry will likely see only modest gains for the holiday period, experts forecast.
The International Council of Shopping Centers-Goldman Sachs chain-store sales index for the week ending Dec. 28 rose by 1% from the prior week's adjusted level, as the pace of holiday shopping once again accelerated ahead of Christmas Day. The index rose 3% vs. a year earlier, marking its highest year-over-year gain within the month.
The pickup followed a 1.4% weekly rise and a 2.7% year-over-year pop in the index for the week ended Dec. 21.
"The last week was a good blend of pre- and post-Christmas shopping, and from our data it was the busiest week of the season," said Michael Niemira, chief economist at the International Council of Shopping Centers.
"It reinforces our expectation that the season will finish a bit stronger than last season," he said.
A Batch Of Forecasts
Niemira is sticking to his forecast for a 3.4% gain from a year ago in GAFO (general merchandise, apparel and accessories, furniture and other) sales for November-December. That would compare to last year's 3% increase.
He's also holding his outlook for a 3% to 4% increase in December same-store sales vs. a year ago for the 12 monthly reporting retailers he tracks. Retailers report December comps on Jan. 9.
Niemira says same-store sales for the chains that report monthly comps are running about 2 percentage points higher than the industry as a whole.
"When the dust settles, I think the season will look a little better on the whole relative to last year's performance," he added.
Niemira sees the holiday fourth-quarter comps rising 2% vs. a year earlier compared with last year's 1.3% rise. (See chart.)
Ken Perkins, president of Retail Metrics, says his channel checks show traffic levels last week were an "improvement" over previous weeks. "But it didn't constitute enough to put retailers into a really positive spot," he said. "I don't think it was the kind of crush retailers really needed to make it a very successful holiday season."
Perkins expects total November-December retail sales to rise around 2.5% vs. a year earlier. He sees same-store sales up about 2%.
Overall, the highly competitive and promotional 2013 holiday season likely won't give retailers much cause to celebrate.
"The holiday 2013 shopping season was one most retailers would like to forget, in that they had to discount more than they would have preferred," said Perkins.
"There were no easy sales to be had," he said. "And I think they are looking forward to 2014 and trying to figure out how best to service their customers and differentiate their products and services and generate higher margins."
The shopping showing was mixed throughout the season, including last week, says Niemira, who notes that last week was very strong for department stores, which got the biggest boost in business over the prior week.
Department stores are usually viewed as the "key place" for holiday gift buying, Niemira says.
Discounters and dollar stores followed with strong sales. But business was softer than the prior week for apparel stores, Niemira says.
Apparel retailers have been especially promotional throughout the holiday, says Niemira, because they came into the season with inventories "too high."
Bill Martin, founder of retail traffic tracker ShopperTrak, says retail sales lifted in the final days leading up to Christmas after a "little lackluster" showing in December in the weeks right after Black Friday.
"There was a little resurgence at the end on Dec. 22, Dec. 23 and Dec. 24," said Martin. "All three days were relatively strong from a traffic and sales standpoint.
Martin is sticking to his forecast of a 2.4% increase in November-December national retail sales to about $265 billion. That would compare with a 3% gain last year.
"Holiday 2013 was a tipping point, with more sales transacted electronically, whether on mobile platforms, desktops or tablets," said Perkins. He added that retailers able to make the experience seamless for the consumer across platforms "are best positioned for 2014."
Perkins says those brick-and-mortar retailers best able to meet that need experienced a good holiday season.
Macy's, he adds, had the strongest foot traffic in stores during the season, and is in the best position online among department stores.
Off-price retail operators such asRoss Stores ( ROST ) andTJX Cos. (TJX) were among the season's best performers, he says, as were upscale brands such asTiffany & Co. (TIF) andMichael Kors Holdings (KORS).
Retailer profit margins have been under pressure during the season.
The fourth-quarter earnings index for the 120 retailers tracked by Retail Metrics is expected to be up 1.1% vs. a year earlier. Analysts expect fourth-quarter revenue to rise 1.9% and same-store sales to increase 1.1%, Retail Metrics notes.
As for the consumer spending outlook for the 2014 first quarter, Niemira says it all depends on the employment picture.
"Our forecast is for somewhat stronger and more sustained employment growth than what we have been seeing," he said. "That ought to give a little more momentum to the sales pace."
Overall, he adds, the retail industry's performance should remain "uneven." "The consumer is still shopping by event, which makes it very choppy, even in an improving economy," Niemira said.