Retail Sales Seen Up as Weather Aids Spending

By Matt Townsend - Dec 23, 2011 12:00 PM GMT+0700

As Bing Crosby croons “White Christmas” in malls around the U.S., retailers from Chicago to Boston are betting on a snow-free weekend to cap a strong holiday shopping season.

Last year, a blizzard that began on Christmas closed thousands of stores on the East Coast the next day, when millions of consumers typically make exchanges and redeem gift cards.

The calendar is also lending a potential boost. Christmas Eve lands on a Saturday, and Macy’s Inc., Toys “R” Us Inc. and Family Dollar Stores Inc. (FDO) are all extending their hours. The day after Christmas, one of the biggest shopping days of the year, is Monday. Last year, it fell on Sunday, when religious services and football games kept people away from malls.

“It’s going to be hugely better after last year was a wipeout for about 15 percent of the country,” said Craig Johnson, president of consulting firm Customer Growth Partners. That could boost sales in stores and on the Web Dec. 26 from an estimated $20 billion last year to $29 billion and make it the year’s largest shopping day, he said in an interview.

No major snowstorms are forecast for the U.S. this weekend, continuing one of the warmest and driest holiday seasons on record. U.S. snowfall this month is projected to be as little as 450 inches, about half the amount that fell last December, according Berwyn, Pennsylvania-based Planalytics Inc.

U.K.’s Boxing Day

Same goes in the U.K., which has had above-average temperatures and little snow after several blizzards, including one in late December, hit the country last year. While holiday retail sales are projected to be little changed, store visits rose 0.6 percent last week from a year ago, according to Experian FootFall, a research firm based in Solihull, England. London may be disrupted if transit workers proceed with a strike beginning on Dec. 26, which is called Boxing Day and has been one of the nation’s biggest shopping events.

“The 48 hours before Christmas from Friday to Saturday will be mega,” Jace Tyrrell, a spokesman for London’s New West End Company, which represents more than 600 fashion brands, said in an interview.

One of the effects of the balmy weather, including North America’s fourth-warmest November of the past 50 years, is less demand for sweaters and jackets. As a result, such U.S. apparel chains as Abercrombie & Fitch Co. (ANF) and Gap Inc. (GPS) have been discounting cold-weather gear, with markdowns of as much as 70 percent last weekend, Stacy Pak, a San Francisco-based analyst for Barclays Capital, said in a Dec. 20 note to clients.

Super Saturday

In the U.S., the final holiday push comes as consumers ended the traditional shopping lull after Thanksgiving weekend by spending $26 billion on the Web and in stores on Dec. 17, according to Johnson. That day, marketed by retailers as Super Saturday, with some of the best deals of the season, fell just short of the $27 billion spent on Black Friday, New Canaan, Connecticut-based Customer Growth said.

Revenue during Thanksgiving weekend increased 16 percent to a record $52.4 billion, prompting the Standard & Poor’s 500 Retailing Index to advance 3.1 percent on Monday, Nov. 28, for the biggest gain in a month. Since then, the measure has risen another 2 percent, compared with a 5.2 percent increase for the Standard & Poor’s 500 Index.

November same-store sales rose 3.2 percent, topping analysts’ expectations. That performance prompted the National Retail Federation and ShopperTrak to raise their projections for holiday sales in retail stores to gains of 3.8 percent and 3.7 percent, respectively. Customer Growth Partners, which includes online sales, left its estimate unchanged at an increase of 6.5 percent.

Last-Minute Shoppers

On top of that, 30 percent of consumers had holiday shopping left to do entering this week, an increase from 26 percent a year ago, according to the International Council of Shopping Centers.

Chains are trying to attract those last-minute shoppers by extending store hours. Closely held Toys “R” Us planned to keep almost all of its 600 U.S. locations open for 112 uninterrupted hours from Dec. 20 to Christmas Eve. The Wayne, New Jersey-based retailer’s flagship in New York’s Times Square will push that to more than 200 hours.

Macy’s (M), the second-largest U.S. department store chain, is opening some locations for 83 straight hours and extending closing hours to 2 a.m. at others.

Family Dollar, based in Matthews, North Carolina, will operate on Christmas for the first time by opening about half of its 7,000-plus stores from 10 a.m. to 3 p.m. This came after it added an extra hour to all its stores for this entire month.

Extended Hours

These extended hours are the latest example of retailers going after sales by any means necessary, according to Poonam Goyal, a Bloomberg Industries analyst in Princeton, New Jersey.

Consumers started seeing Black Friday deals just after Halloween, a month before the actual Black Friday. Several chains, including Kohl’s Corp., opened at midnight on Thanksgiving for the first time while Wal-Mart Stores Inc. (WMT) moved its release of Black Friday deals to two hours before that. Most of the industry offered some kind of free shipping deal. When shopping events passed, a few chains repeated them.

“There aren’t many more buttons they can push,” Goyal said in an interview. All of this will drive sales, she said, while “margins are a different question.”

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net