Holiday Sales Rise, but Not All Retailers Are Cheery--Update
January 07 2016 - 8:19PM
Dow Jones News
By Suzanne Kapner
Consumers didn't pull back as much as feared during the
holidays, but their late spending surge didn't help retailers that
were ill-equipped to deal with changes in behavior that will last
beyond the season.
Retail sales rose 3.3% from Oct. 31 through Jan. 4, about the
same pace as they grew the previous year, according to First Data
Corp., which processes credit-card transactions and analyzed
payments at 1.3 million retailers.
The gains came despite fewer visits to physical stores: Foot
traffic fell 6.4% in November and December, according to
RetailMetrix, which collects data through analytics software
provided to retailers.
While several large retailers, including Wal-Mart Stores Inc.
and Amazon.com Inc., haven't reported their holiday results yet, a
few major players provided a glimpse this week of how the season
shook out. The shifts toward online shopping and consumers'
spending on travel and restaurants are pressuring retailers who
aren't adapting fast enough, particularly department stores.
Macy's Inc. warned that sales at existing stores fell 4.7% in
November and December and said it would cut thousands of jobs as it
closes stores. Gap Inc., which is also closing stores, said
December sales for existing stores fell 5% from a year earlier. But
L Brands Inc., owner of mall stalwarts such as Victoria's Secret
and Bath & Body Works, posted an 8% jump in sales at existing
locations, and said last month was its "best December ever."
"You can't just look at the mall and say the consumer is weak,"
said Paul Lejuez, a Citi analyst. "Some of those guys are losing
share."
"The consumer is spending, but the question is what are they
spending on?" said Mr. Lejuez. "They want newness, and they are
finding it in technology and experiences. They are going to see
"Star Wars" and going out to eat."
In 2015, consumer spending adjusted for inflation likely
contributed its largest share to GDP growth in a decade, according
to research firm IHS Global Insight. That was partly due to the
roughly $722 less that each household spent on gas last year.
But people aren't spending that extra money on clothing or other
items that typically top holiday shopping lists. Rather, they are
eating out, buying cars and making improvements to their homes--and
when they are buying apparel they are shopping at sporting goods
stores for "athleisure" items, IHS found.
Retailers faced several challenges this holiday season,
including high inventories, unseasonably warm weather and a
slowdown in purchases by international tourists due to the strong
dollar. And when shoppers did make purchases, they increasingly
waited for discounts or ordered online. That crimps profits for
most retailers, since online margins tend to be lower.
Despite years of effort and billions of dollars of investment,
most retailers still get only a small percentage of their business
from e-commerce, leaving them vulnerable to large online
players.
Amazon.com captured 42.7% of online sales in November and
December, according to Slice Intelligence, a research firm that
gathered data on the email receipts of 3.5 million consumers. That
compares with 24.8% share for the next 10 biggest retailers
combined, including Wal-Mart, Target Corp., Macy's, Nordstrom Inc.
and Best Buy Co.
ComScore expects total e-commerce sales in November and December
likely rose about 13% to $69 billion, according to preliminary
estimates from the Internet analytics company. That's shy of its
forecast of a 14% increase. The shortfall came as more shoppers
switched to mobile commerce, where the dollar value of purchases
tend to be lower.
"The two biggest growth areas in retailing today are online and
off-price," said Jerry Storch, chief executive of Saks Fifth Avenue
and Lord & Taylor parent Hudson's Bay Co. His company reached a
deal Thursday to buy Gilt Groupe Inc. for $250 million. It plans to
combine the flash-sale site with its Saks Off 5th discount chain,
as previously reported by The Wall Street Journal.
Most sales are still made at physical stores. Some 91% of
shoppers made a purchase at a brick-and-mortar store this holiday
season, according to a survey by the International Council of
Shopping Centers. The primary reason for going to a store was the
ability to see, touch and try on the merchandise, the survey
said.
Macy's blamed unseasonably warm weather, which sapped demand for
coats and winter gear, for much of its sales declines. On Thursday,
the Japanese owner of the Uniqlo chain of fast-fashion stores, Fast
Retailing Co., also blamed warm weather for an 11.9% drop in
December same-store sales. But J.C. Penney Co. reported a 3.9%
increase in sales at existing stores, despite the warm weather, in
part due to "record" online sales for the holiday season.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
January 07, 2016 20:04 ET (01:04 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Francescas (NASDAQ:FRAN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Francescas (NASDAQ:FRAN)
Historical Stock Chart
From Jul 2023 to Jul 2024