Featured Posts

To top
27 Dec

Christmas Wrap: Stores See Moderate Gains, Questionable Margins

Stores See Moderate Gains

It wasn’t a blockbuster or a bust.

Stores See Moderate Gains Retailers emerged from the holiday season with mid-single-digit revenue gains, questionable margins, and leftover fall and holiday inventories. They now stay up for not less than three weeks of intense clearance activity to shed the surplus, generate early spring selling and make up for business lost during last week’s lethal “cyclone bomb” from Mother Nature.

The storm caused dozens of deaths, a whole lot of 1000’s of power outages and big flight delays. Greater than 183 million people nationwide fell under wind chill advisories and warnings last week. Michigan, Minnesota, Kentucky and western Latest York were among the many areas worst hit by snow, ice and winds. Underscoring the danger, Gov. Andy Beshear of Kentucky on Friday warned Americans, “Stay inside. Stay off the roads. Last-second shopping isn’t value it if it could cost you your life.”

Still, major urban areas on the East and West coasts with the most important concentrations of retail were hit less hard, so the weather event was not that impactful for the industry. Freezing temperatures for a lot of the East continued through Monday, though it is anticipated to warm as much as the 40s and even high 50s by late this week. That may get people out on the lookout for more deals but won’t do much for winter-related merchandise.

Based on interviews and reports Monday from retailers and analysts, consumer spending held up for many of 2022’s prolonged holiday season, because of perpetual price promoting starting in October. Gas prices dropping from a mean of greater than $5 in June to only over $3 in December in lots of states also helped, as did the onset of wintry weather spurring sales of coats and cold-weather accessories. Markdowns this month culminated at as much as 50 to 60 percent off in lots of cases, encouraging each self-purchasing and gift shopping at sufficient enough levels.

A precise read on the vacation season won’t be known until fourth-quarter financial reports are issued in February and March. On everybody’s mind for next yr: the probability of a recession. Most retailers and industry analysts consider it is going to occur, and the actual query is whether or not the economy will land hard — meaning an prolonged period of recession lasting greater than two quarters — or whether it’s a soft landing.

On Monday, Mastercard SpendingPulse reported that U.S. retail sales, excluding automotive, increased 7.6 percent year-over-year this holiday season, running from Nov. 1 through Dec. 24. Mastercard SpendingPulse measures in-store and online retail sales across all types of payment and isn’t adjusted for inflation.

“This holiday retail season looked different than years past,” said Steve Sadove, senior adviser for Mastercard and former chief executive officer and chairman of Saks Inc. “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic.”

Holiday shopping in Latest York City on Wednesday.

Lexie Moreland/WWD

In response to Mastercard’s preliminary figures, online sales grew 10.6 percent in comparison with the identical period last yr and represented 21.6 percent of total retail sales, up from 20.9 percent in 2021 and 20.6 percent in 2020.

Black Friday was the highest spending day of the 2022 holiday season, up 12 percent year-over-year, excluding automotive. This was followed closely by Saturdays in December, Mastercard indicated.

“Constructing on the continued demand for experiences, in-person dining continued to indicate strong momentum with restaurants up 15.1 percent, year-over-year,” said Sadove.

“Inflation altered the best way U.S. consumers approached their holiday shopping — from trying to find the perfect deals to creating trade-offs that stretched gift-giving budgets,” said Michelle Meyer, North America chief economist, Mastercard Economics Institute. “Consumers and retailers navigated the season well, displaying resilience amid increasing economic pressures.”

Craig Johnson, president of Customer Growth Partners, said despite the storm, “It was the strongest pre-Christmas week we’ve seen in memory. Christmas Eve, which is normally muted, was just exceptional. Conversion rates really jumped up on Dec. 23 and 24. The bad news was there was a really deep December lull, down 8 or 9 percent, putting retailers in a worse hole than usual.

“The day after Christmas is at all times just a little slow to start as people get better from Christmas Day, but once you bought near to 11:30 things got busy and stayed strong,” Johnson added.

He sees retailers posting holiday sales gains of 5.5 to 7.5 percent. “Things were strong, but not as strong as last yr when there was a post-COVID-19 rebound. Some retailers are having a tough time comping the comp.”

By Johnson’s account, top-performing categories were apparel, toys, food and beverage, cosmetics, fragrances, jewelry, footwear, in addition to upscale malls including Neiman Marcus, Saks Fifth Avenue, Bloomingdale’s and Nordstrom, and the dollar store sector. Big-box stores like Walmart and Costco did OK.

“Overall, the weather lifted demand for need-based categories in addition to cold-weather gift-giving categories throughout December leading as much as Christmas,” said Evan Gold, executive vp of Planalytics, a consulting firm that helps retailers plan inventories based on weather forecasts. “The last two weeks of December leading as much as Christmas were much colder than last yr, helping to drive demand for seasonal categories.

“But looking ahead. January might be warmer than last part, and there might be limited opportunities for clearance of cold-weather categories on a year-over-year basis.”

For some regional retailers, last week’s storm ruined a few days of business. “It was horrible. All over the place from Atlanta as much as the Midwest was brutal, specifically Illinois, Iowa, Minnesota and Nebraska,” Jim von Maur, CEO of the Davenport, Iowa-based Von Maur, told WWD. “There have been 40 to 60 mile an hour winds for 3 days, ripping interstate road signs to threads.”

He said 80 percent of Von Maur’s business, which incorporates 37 malls and the 70 Dry Goods specialty stores selling contemporary women’s fashion, accessories, shoes and gifts, was impacted by the weather, primarily Thursday and Friday. “If you’ve a store in Alabama or Atlanta, you only don’t know how one can cope with the intense cold,” von Maur said.

Jim von Maur said December sales were good but more was hoped for.

Still, von Maur said December overall was good, but not like last yr. “We were hoping for more but post-Christmas selling keeps recovering and higher for us. Monday is a vacation for quite a lot of people. They may come out shopping. The wind isn’t nearly as bad, and every day will recover,” because the week progresses.

He said von Maur’s margins are “pretty decent,” though within the junior business, “we needed to be just a little more aggressive.” Otherwise, Uggs, Vineyard Vines and Tommy Bahama were bestsellers.

“We exceeded our goals for the season,” said Shane Grenley, the U.S. manager for the Barcelona, Spain-based Mango fashion chain. “Traffic was up, not in all locations, but it surely was up overall. When it comes to inventory levels, and having the correct product aligned per store, per state, it’s been a positive experience.”

Late within the season, sales of coats, sweaters and dresses really picked up within the U.S., Grenley said. “It was all about people buying for themselves to exit to parties and buying more novelty styles as gifts for others.”

“We only placed on sale our underperforms. Our top 40 items we didn’t placed on sale, but quite a lot of competitors were doing the entire store-wide sale,” Grenley said.

Mango went into full sale mode on Monday to filter out inventory from 2022, and might be bringing in latest transitional pieces in mid-January and February. “The goal is to liquidate underperforms and fall. We’re starting now to maximise the traffic coming in,” Grenley said.

Mango’s best-selling faux shearling lined jacket, priced #149.

Ken Ohashi, CEO of Brooks Brothers, said the corporate “had a powerful start, felt just a little lull after which saw a powerful construct” right before Christmas. “It wasn’t a consistent flow,” he said, speculating that because there was an additional shopping Saturday this yr, customers didn’t feel pressure to buy early.

Cold-weather product “really turned on because the season progressed,” he said, as did sportswear, which has turn into the most important category for the retailer.

Brooks Brothers’ women’s business continued to post good comps, he continued. In the primary half, much of the ladies’s profession and luxury items — where the corporate focused efforts — were out of stock, however the flow improved within the back half, making “an enormous difference,” Ohashi said.

The corporate can also be attracting a younger customer because of the updated assortment designed by Michael Bastian, he said.

“We should end the month where we thought we’d,” he said. “Once we have a look at the whole fourth quarter and yr, we feel good. And our inventory levels are well-controlled which could be very positive as we head into [the first quarter].”

Bob Mitchell, co-CEO of Mitchells Stores, said the vacation season was an enigma. Although overall sales got here in below expectations, it was still the second-best Christmas within the history of the corporate.

“It began slow, the center was strong and it faded at the top,” he said, because the storm that blew across the country just before Christmas forced stores in Seattle and Portland, Oregon, to shut. “We missed plan, but it surely was still very strong.”

The highest sellers were luxury items from brands akin to Brunello Cucinelli, Zegna, Loro Piana, Isaia and Akris. Women’s handbags from Saint Laurent, Bottega Veneta and Loewe saw growth on top of a record yr in 2021. But jewelry, “an enormous growth engine” through the height of the pandemic, wasn’t as popular this yr.

There have been reports that luxury overall has begun to slow within the U.S. after almost two years of strong growth.

Looking ahead, Mitchell said he thinks 2023 might be “good, not great. People should not panicking, however the pent-up demand/binge shopping is over. We’re still cautiously optimistic.”

Ken Giddon, president of Rothmans men’s stores in Latest York, said, “It was a great season. We kept going to the top so we were pleased. Our suburban stores were strong and the town made a comeback. All the pieces slowed just a little a month ago, but that was from very high levels. We sell a higher-end customer, so we didn’t see the slowdown the national retailers saw.”

Top sellers included outerwear, trousers and denim, he said, and within the week before Christmas, accessories as gifts were strong.

“We’re looking forward to 2023,” Giddon said. “We’re anticipating challenges, but we’ll use what we have now learned prior to now. If we could handle being shut for six months, we are able to handle a recession.”

At Macy’s, popular items this holiday season included fragrance gift sets, nice jewelry sets; toys from Toys “R” Us departments inside Macy’s, and online; cosmetic gift sets, and comfortable sweaters and coats.

“This yr, consumers were hearing concerning the glut of inventory and were likely waiting do more last-minute holiday shopping to get the perfect value,” a spokesperson from Macy’s indicated.

“For holiday, we’re seeing a latest trend with big diamonds set in yellow gold so as to add much more bling,” said Jamie Singleton, group president and chief consumer officer at Signet Jewelers. “Black diamonds have also trended for each men and girls. Moreover, we’re continuing to see an the trend in men’s jewelryincrease even blurring the gender lines with each men and girls gravitating towards classic trends akin to pearl strands, tennis necklaces, diamond studs, and signet rings. Across our retailers, yellow gold continues to be a trend driver. We also saw a requirement for luxurious gifts.”

“The weather was pretty brutal up here,” said Harry Cunningham, cofounder and owner of GoodMrkt, positioned within the Jefferson Pointe mall in Fort Wayne, Indiana. Business was impacted on Dec. 23, with the mall opening late, and by lunchtime, people got here out and the afternoon business was OK, Cunningham said. He closed the shop early, so employees would get home safely. GoodMrkt sells brands that support a wide range of causes, from women’s empowerment to ending poverty and hunger to helping the environment through donations, a percent of proceeds or how the products are manufactured and sourced.

He said business on Christmas Eve was flat to last yr, and GoodMrkt saw midsingle gain for the season. “From talking to my retail neighbors, they were actually comfortable with how the season was going.”

Some bestsellers were Sackcloth & Ashes blankets, priced $110 to $140, where for each blanket sold one other one is given to a homeless shelter. Ranger Station candles, priced $39, also sold well. The candles are available reusable whiskey glasses.

“This yr, especially in comparison with last yr, saw promotional activity quite a bit earlier primarily because of access to product. Last yr was far less promotional,” said Stephen Yalof, CEO of Tanger Factory Outlet Centers. “We’re heartened by reports that, within the last week or two, customers got out early in anticipation of the damaging weather that occurred within the more northern states.”

He also said many consumers used Tanger’s app to “window shop” so to talk and plan online despite the severe weather conditions. “They became way more mission-driven and did less tire kicking.”

Yalof did acknowledge that Tanger lost “a number of shopping hours because of early closures particularly at our centers within the north.…With value being the mission and clearance for quite a lot of our retail partners, I feel they were capable of execute to what they were planning to.”

“This holiday season has been one of the vital competitive environments we’ve seen in recent times,” said Paige Thomas, president and CEO of Saks Off fifth. “We found that customers were trying to find luxury at a worth and we focused on our worth proposition throughout the season, ensuring we delivered. A few of our hottest promotions were our designer flash sales for Golden Goose, Saint Laurent and Valentino. As we head into 2023, we anticipate the market to be highly promotional into January. We’re focused on continuing to supply what the posh fashion shoppers are on the lookout for — at incredible prices.”

“In case you take out the bad weather last week, overall retailers did well. The trick is where did the margins are available,” observed Sharon Leite, CEO of The Vitamin Shoppe, speaking about retailing generally. “The sales line was pretty strong, but it surely really comes right down to what the gross margins were.

“We saw positive trends in our business,” Leite added, citing sports nutrition and supplements and “on- the-go” dietary drinks and snacks as bestsellers. “We feel pretty good about where the buyer is, though they’re cautious.” Post-Christmas and January is The Vitamin Shoppes biggest selling period as people make resolutions about living healthier lifestyles after partying it up through the holidays.

Noting that industry reports through Black Friday and Cyber Monday called for pretty strong gains, including the National Retail Federations’s 6 to eight percent increase, Leite said, “I’m curious where it finally ends up due to cold and snow last week. There still are inventory gluts on the market in certain areas of retail. I might be interested to see how deep the after-Christmas sales go.”

Bill Brand, CEO of Rue21, was visiting family in Buffalo, Latest York, and was stuck there on Monday since the airport was still closed because of the storm. “We just about met our expectations. We went into the season with a solid plan and were increase quite a lot of momentum within the last two weeks. Last week was our biggest week of the yr, however the severe weather had an impact, about 10 percent of our stores were impacted. Five percent were closed, one other 5 percent had limited hours. Our teams managed very well. Some business was pulled forward as people saw the storm approaching.”

Brand said the season was “all about casual and comfortable, and layering for ladies. Contour and seamless tops did spectacularly. On top of that we saw an enormous business in sweatshirts, shirt jackets and varsity jackets.” Fleece for $29, with a buy one, get one for $10, also sold well. “Jeans are at all times strong but we’re beginning to see a return to lightweight cargo pants, and parachute pants just began to sell.”

Brand said Rue21’s margins are up significantly from two years ago, as the corporate shifted to more of an on a regular basis low price positioning. “We’ve got a low income customer. They need the styles and trends. They simply want it as an awesome value.”

“This holiday season was all about value, value, value with customers feeling the impact of inflation,” said Kevin Tulip, president of Primark U.S. “As a worth retailer, this coupled with our three latest Latest York store openings [downtown Brooklyn: Jamaica, Queens and Roosevelt Field mall in Garden City] in as many weeks. We saw a powerful run as much as Christmas and busy holiday season. Being a bricks-and-mortar only retailer means our store footfall will be a great reflection of purchaser sentiment and this yr people were definitely back out shopping in person. Our stores were busier than ever. While U.S. shoppers are still attending to know Primark’s offerings, our licensed products, already a firm customer favorite, saw an enormous jump this holiday season.” NBA, NFL, Marvel, Netflix and Disney are key licensed brands on the Dublin-based Primark.

Primark saw a powerful holiday season within the U.S., with a jump in licensed product sales.

Newscast Creative

Businesses on Manhattan’s Madison Avenue, in accordance with Matt Bauer, executive director of the Madison Avenue Business Improvement District, saw their strongest traffic earlier in December, as lots of the affluent local residents tended to buy earlier before traveling to second homes for the vacations. Some recent store openings, akin to Hermès’ relocated flagship, Irene Neuwirth and Kirna Zabete helped herald some traffic.

While the absence of many tourists from China continues to be an element, Madison Avenue hotels reported an uptick in travelers from South America and Europe, he said. During a recent neighborhood tour, The Lowell indicated the property was entirely booked, Bauer said.

David Bassuk, global co-leader of AlixPartners’ retail practice, said the vacation season was in step with the consultancy’s forecast for a 4 to 7 percent gain — a rise that was whittled right down to about nothing given the inflation that’s shaped the economy and the buyer mindset.

“It’s been a moderate holiday. Business is up, but not as much” as some hoped, Bassuk said. “Online still is a large factor, but is decelerating from last yr.”

The cruel weather across much of the country kept many individuals from making their last dash out to stores. And while that had some people logging in and shopping online, Bassuk said the storm has arrange a possibility for retail this week.

“Now that the weather is petering out a bit, I feel we’re going to see an enormous post-Christmas shopping spree,” Bassuk said. “It’s normally a time for returns,” he said. “This yr, I feel we’re going to see people exit and get shopping and search for those deals that [they missed] over the past weekend.”

On Monday, clearance activity looked as if it would crescendo. Gap offered an additional 60 percent off already marked down merchandise. Banana Republic was at as much as 60 percent off. Lands’ End was at as much as 80 percent off. Saks Fifth Avenue offered as much as 40 percent off certain designer brands, and The Container Store was as much as 50 percent off.

“Now could be the time for retailers to be making aggressive plays to get consumers into their store,” Bassuk said, and check out to maneuver that inventory that no retailer desires to be stuck with in January.”

That actually gave the impression to be the considering at Goal Corp., which was working hard to get shoppers off their couches post-Christmas. The discount giant launched what it dubbed “The Goal Clearance Run” with sale promotions of as much as 50 percent off on apparel, sleepwear, shoes, beauty gift sets, toys and more.

As Christina Hennington, executive vp and chief growth officer at Goal, said, “Our guests at all times stay up for post-holiday deals, whether or not they’re trying to spend the gift cards they received as a vacation gift, restock their pantries after hosting for the vacations or prepare for a Latest Yr’s celebration.”

— With contributions from Jean E. Palmieri, Evan Clark and Rosemary Feitelberg

Recommended Products

No Comments

Sorry, the comment form is closed at this time.