Re­tail­ers cau­tious ahead of US hol­i­day shop­ping sea­son

Grim fore­casts raise doubts over hol­i­day boon

Kuwait Times - - BUSINESS -

NEW YORK: Lack­lus­ter earn­ings re­ports from re­tail­ers have raised ques­tions about whether the 2015 hol­i­day shop­ping sea­son will bring as much of a boost to the US econ­omy as hoped.

Ap­parel gi­ant Gap and kitchen and home fur­nish­ings chain Wil­liams-Sonoma late this week be­came the lat­est big US re­tail­ers to slash their profit forecast for the crit­i­cal De­cem­ber quar­ter.

The grim fore­casts raised doubts about whether an im­prov­ing US jobs mar­ket and lower gaso­line prices will trans­late into a hol­i­day boon for re­tail­ers. Con­sumer spend­ing ac­counts for about 70 per­cent of US eco­nomic ac­tiv­ity. Ear­lier in Novem­ber, Macy’s also gave a dim out­look, cit­ing a drop in sales to for­eign tourists be­cause of the strong dol­lar and the need to sharply dis­count a glut of cold-weather mer­chan­dise that has not moved due to un­sea­son­ably warm weather. “I wish I could say it’s go­ing to get ice cold across the coun­try,” Macy’s chief ex­ec­u­tive Terry Lund­gren said in a Novem­ber 11 con­fer­ence call with Wall Street an­a­lysts. “But you can see in our forecast for the fourth quar­ter we are not ex­pect­ing that.”

“We’re not sell­ing lum­ber, so I can’t carry the lum­ber over to 2016 and sell it at the same price next year. We’re sell­ing fash­ion ap­parel, so we’re go­ing to mark that in­ven­tory down. That will be good for con­sumers but it will ob­vi­ously put pres­sure on our own mar­gins.”

In­ven­tory lev­els at auto deal­ers, fur­ni­ture stores, home im­prove­ment cen­ters and depart­ment stores all rose in Septem­ber, lifting the in­ven­tory-to-sales ra­tio in that month to the high­est level since May 2009, ac­cord­ing to a re­port by con­sul­tancy IHS.

IHS projects a 3.5 per­cent rise in hol­i­day re­tail sales in 2015 com­pared with last year. Growth of 3.5 per­cent is “a pretty strong forecast,” said econ­o­mist Chris Christopher, adding that the eco­nomic ef­fects are mixed. “Con­sumers are ben­e­fit­ting, but re­tail­ers are hav­ing a hard time,” he said.

Black Fri­day changes

Chris Mor­ran, deputy ed­i­tor at the Con­sumerist, an in­de­pen­dent con­sumer ad­vo­cacy site, pre­dicted no ma­jor changes to over­all sales in 2015. “There hasn’t been a dras­tic change in the jobs pic­ture. There hasn’t been a huge in­crease in wages,” he said. Much big­ger than any change in over­all sales will be the role of on­line commerce this hol­i­day shop­ping sea­son, which kicks off in force the day af­ter Thanks­giv­ing, known as “Black Fri­day.” The fo­cus on e-commerce means stores are no longer em­pha­siz­ing open­ing up on Thanks­giv­ing night and are stretch­ing out the sea­son of hol­i­day pro­mo­tions. Ama­zon has had “Black Fri­day” spe­cials since Novem­ber 1. “Peo­ple have be­come a lot more savvy and re­al­ize that a lot more of th­ese Black Fri­day door­busters are just junk,” Mor­ran said.

On­line has been em­braced much heartily than be­fore by re­tail gi­ants like Wal-Mart stores, which this year for the first time will make the more than 90 per­cent of its “Black Fri­day” dis­counts avail­able on­line. Fewer in-store spe­cials re­duces the chance of dan­ger­ous crowds that have some­times led to se­ri­ous in­jury, in­clud­ing the 2008 fatal­ity of one Walmart worker stam­peded to death. Walmart will also of­fer on­li­neonly spe­cials on Thanks­giv­ing Day of high-def­i­ni­tion tele­vi­sion, Star Wars gam­ing head­sets and other good­ies “so cus­tomers can shop while the tur­key is in the oven,” the com­pany said in a Novem­ber 12 an­nounce­ment of its Black Fri­day plans. — AFP

MAN­HAT­TAN: Peo­ple walk by Macy’s Her­ald Square in mid­town Man­hat­tan Novem­ber in New York. Lack­lus­ter earn­ings re­ports from re­tail­ers have raised ques­tions about whether the 2015 hol­i­day shop­ping sea­son will bring as much of a boost to the US econ­omy as hoped. — AFP

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