Online retailers are off to a better-than-expected start for holiday

Tuesday, November 27th 2001, 12:00 am
By: News On 6

NEW YORK (AP) _ Based on early sales reports, the holiday shopping season appeared to be off to a better-than-expected start for online retailers.

The news pushed shares of key Internet stocks higher in trading Monday.

Shares of, the bellwether of the Internet industry, surged more than 34 percent, or $3.13, closing at $12.21 on the Nasdaq Stock Market, on early indications that holiday sales growth may be better than expected. In extended trading, Amazon shares were up another 27 cents.

Yahoo! Shopping estimated that sales through its portal site from Friday to Sunday, the Thanksgiving weekend, were 75 percent higher than the same time a year ago. That was well above analysts' projections for a 30 percent to 50 percent gain. The news prompted Yahoo's shares to soar nearly 15 percent, or $2.34, closing at $18.07. Shares were up another 15 cents in extended trading.

Meanwhile, Kmart's saw sales up 45 percent for Thursday through Sunday, compared to the year-ago holiday weekend, said spokesman Dave Karraker. Traffic was unchanged, suggesting that more browsers were being converted into buyers.

``This is a great start for us, and exceeded expectations,'' Karraker said. ``This should silence a lot of nay-sayers who were down on the potential for e-commerce this year.''

He added, ``We didn't even offer any shipping promotions or dollars off discounts,'' he said.

Still, such comforting news won't prompt Ken Cassar, an analyst at Jupiter Research, to change his forecasts for a modest 11 percent gain this holiday to $11.9 billion, from last year's $10.8 billion.

``The early indications seem to be positive, but it is difficult to extrapolate these results to the entire e-commerce community,'' he said.

Cassar said that e-commerce has lost its ``gee-whiz'' factor, and is more vulnerable to the slowing economy this year.

With the exception of, brick and mortar retailers' online sites were among the most popular this weekend.

According to Nielsen/NetRatings, Amazon led the traffic on Friday, attracting 1.7 million users, registering a 33 percent increase from the previous week.

Wal-Mart saw a 132 percent increase to 355,011 shoppers, followed by, which attracted 312,000 shoppers, or a 152 percent gain. Kmart's saw 227,000 shoppers, a 227 percent increase, and Sears drew 220,000 visitors, up 73 percent. J.C. Penney Co. Inc., grew to 217,000 visitors, an increase of 86 percent.

The big test for online retailers will be in the next two weeks, which represents the bulk of online holiday sales.

Cassar is looking for an increase of 25 percent to 50 percent in sales each of those weeks, he said. During the week of Dec. 10, e-commerce sales will start to wane because standard shipping will no longer guarantee the arrival of gifts in time for Christmas.

Internet analysts are closely watching Amazon, which promised pro-forma profitability in the fourth quarter and projected that sales for the period would be anywhere from unchanged to a 10 percent gain from a year ago.

Amazon reported on Friday that its customers worldwide had ordered more than 8.9 million items since November 9. On Monday, the online retailer increased that number to 11.8 million. The Seattle-based e-tailer also reported that 700,000 more items were ordered during the past three-day weekend compared with last year's holiday weekend, according to Bill Curry, an Amazon spokesman.

The e-tailer also declared that it was back to ``shopping as usual.'' Sales of DVD players were up 75 percent, from a year ago, and Harry Potter books replaced books on germ warfare and Osama Bin Laden as the top sellers.

``So far, so good,'' said Jeetil Patel, an analyst at Deutsche Banc Alex.Brown. ``Holiday sales for have been pretty brisk.''

Patel said that his analysis of what the company calls its ``Delight-o-meter'' revealed a 41 percent gain in the number of items sold from Nov. 15 through Monday, which surpassed his projections for a 30 percent to 35 percent growth.

In a report, issued Monday, Henry Blodget, the Internet analyst at Merrill Lynch, said that his analysis of the Delight-o-Meter suggests that daily items sold in the past two weeks is approximately 20 percent to 30 percent higher than in the same two weeks last year. That means that ``Amazon is likely tracking slightly ahead of consensus revenue estimates for the quarter, which calls for 5 percent growth,'' he wrote.

Wall Street analysts and even Amazon are quick to point out that unit growth may not correlate directly to revenue growth, because of several factors. Amazon does a percentage of its sales through third parties, and has free shipping and lower prices.