According to a Goldman Sachs survey, retailers marking down a substantial part of their inventories right before Christmas brought in enough last-minute and post-holiday buyers for a 3.1 percent sales gain over the previous year.
The Times called the all-important seasonal performance “decent, if unexciting.” Goldman Sachs called it “humdrum.”
“Everyone did a little better than we expected — but that was because our expectations were so low,” Goldman Sachs retail analyst George Strachan told The Times.
The results were not as good as the 4 percent gain reported a year ago, but better than the meager 2.2 percent rise in 2002, which was the worst in five years.
In the end, according to the survey, apparel was not the disaster some retailing consultants had privately said they feared, and electronics was not the blockbuster others had hoped for.
The survey noted that continued climb of luxury stores like Neiman Marcus was not a surprise, although Saks Fifth Avenue’s 12.1 percent increase in same-store sales exceeded analysts’ predictions.
The biggest surprise, noted The Times, was how well the notoriously fickle teenage and young-20s sector did. American Eagle Outfitters, Bebe and Abercrombie & Fitch all demolished previous projections.
Also, Wal-Mart’s last-ditch marketing and limited series of markdowns raised its result from a 2 percent gain to 3 percent and, coming from the world’s largest retailer, the gain lifted the entire average.
Disappointments included Gap Inc. Although the retailer reported just a 1 percent decline, some felt that because The Gap is the country’s largest specialty chain, its results — both good and bad — impact the industry’s overall bottom line.
Toys “R” Us, which is known to be for sale, suffered a 2.2 percent decline over the last nine weeks of the year, which was “pretty much predicted,” according to Gilbert Harrison, chairman of Financo, an investment bank based in New York. “Most of the buyers are looking at it as a fallen company, with tremendous real estate value.”
In 2003, most merchants were successful in holding the line on holiday markdowns. But, said The Times, rising energy prices and the lack of “must-have” toys and clothes resulted in some desperate week-before-Christmas bargain sales in 2004.
It was unclear yesterday how much the quest to beat last year’s sales yardsticks would affect profit margins. Gap, which cut prices deeply — especially at the Old Navy division — said the tactic was successful in getting rid of holiday merchandise and clearing the shelves for the new spring wear. It said Old Navy’s spring collections are already arriving in the stores, two weeks earlier than they did last year.
Abercrombie & Fitch defied industry logic and practice by refusing to indulge in widespread markdowns. While analysts had projected flat comparisons with last year, Abercrombie reported a 10 percent rise.
However, others lost ground. Wet Seal continued its decline, while Pier 1 Imports sold 8.8 percent less in same-store stores.
And, though the pre-holiday predictions had been that electronics — including iPods, flat-screen televisions, digital cameras and other adult toys — would be the hottest sector, Best Buy recorded only a 2.5 percent increase, not even reaching its own 3 – 5 percent estimate.
For individual retailers’ holiday results, continue to watch the Retail Financial Reports channel on this web site.