Retailers reporting worst holiday in three decades

Thursday, Dec. 26, 2002 | 11:23 a.m.

SUN STAFF AND WIRE REPORTS

Wal-Mart Stores Inc., the world's largest retailer, today lowered its December sales forecast, saying a surge in the days before Christmas came too late to save the holiday shopping season.

Sales at U.S. stores open at least a year will rise 2 percent to 3 percent in the five weeks ending Jan. 3, based on results through Dec. 24, Wal-Mart said. The discount retailer had forecast a gain of 3 percent to 5 percent from the year-earlier period. Sales at the company's Sam's Club wholesale membership stores probably will decline.

Wal-Mart cut its forecast even after sales surged in the four days before Christmas, including two days with revenue of more than $1 billion each. Shopping in the final weekend before Christmas, the busiest period of the year for U.S. retailers, failed to overcome months of disappointing sales as consumers concerned about the economy and jobs curtailed spending.

"It's a very weak Christmas," said Keith Goddard, director of research at Capital Advisors Inc., which manages about $800 million and owns shares of Wal-Mart.

Retailers will probably have the smallest holiday sales gain in more than three decades, with Target Corp., Best Buy Co. and Barnes & Noble Inc. already short of forecasts. Federated Department Stores Inc., the parent of Macy's, Bloomingdale's and Bloomingdale's Home, reported same-store sales are falling more than its November- December estimate for a drop of as much as 2.5 percent.

In contrast to the weak numbers reported nationwide, Las Vegas-area retail executives reported generally strong business trends in recent days.

Vicki Duncan, marketing director at Galleria at Sunset mall in Henderson, said the shorter and late holiday season caused sales to start off slow.

But Duncan was optimistic that the last few days would help boost total holiday sales.

"The last few days we think we exceeded our expectations as far as sales," she said. "It just seems that the holidays snuck up on people and they were here."

"We do anticipate being up for the holidays," she said.

Wendy Albert, marketing director for Desert Passage mall at the Aladdin resort on the Las Vegas Strip, said sales for the mall are up at least 15 percent from last year.

Albert said the store's wide selection of retailers in all price ranges is attracting strong foot traffic of about 47,000 customers per day -- 90 percent of whom are tourists.

Cayse Osterlund, general manager of the Boulevard Mall on Maryland Parkway, said necessities sold better this holiday season than luxury items.

"We had mixed results this year," he said.

Fred Walters, general manager Grand Canal Shoppes at The Venetian resort on the Strip, said mall traffic is up from last year.

"We live in a microclimate, one that is tourist driven," said Walters. "We've had an incredible year, and we still have a week to go."

"A lot of it has to do with the 97 percent tourist base," he said. "People come here to escape and people come here with money to spend."

But Wal-Mart, based in Bentonville, Ark., has said the past three Mondays that sales were at the low end of its estimates for December.

A Bank of Tokyo-Mitsubishi Ltd. and UBS Warburg report said on Tuesday that same-store sales for U.S. retailers rose 1.7 percent last week from the year-earlier period. Same-store sales are a key measure of a retailer's business because they exclude results from new or closed stores.

Bank of Tokyo economist Michael Niemira expects November- December same-store sales to rise 1.5 percent from a year earlier, the smallest gain since 1970. Wal-Mart accounts for about a third of the Bank of Tokyo index, which tracks more than 80 retailers.

J.C. Penney Co., Macy's and other rival retailers opened early and offered discounts of as much as 75 percent today to entice shoppers looking for bargains after the holiday.

Bloomingdale's cut the price of a $190 Waring Pro Blender to $59.99, while Sears, Roebuck & Co. offered 50 percent off Craftsman screwdrivers. Prices of cold-weather boots were reduced by 60 percent at Kohl's Corp.

Wal-Mart's low prices have helped it attract customers throughout the recession and in the months of slow spending that followed, analysts and investors said.

"They are the epitome in retailing," said Matthew Kaufler of Clover Capital Management, which manages $1.7 billion including shares of Federated and RadioShack Corp. "If they are feeling it, it's a pretty tough environment.'

A poor holiday means retailers will offer profit-eroding price cuts this week and in January to clear holiday goods and garner some more sales, analysts said. The week after Christmas can account for 11 percent of holiday sales at most mall stores, according to the International Council of Shopping Centers.