Stores See Holiday Retail Slump

Shoppers headed back to the nation's malls the day after Christmas, but merchants and industry analysts are not optimistic that sales between now and New Year's will be enough to offset the slump

Wednesday, December 27th 2000, 12:00 am

By: News On 6

Shoppers headed back to the nation's malls the day after Christmas, but merchants and industry analysts are not optimistic that sales between now and New Year's will be enough to offset the slump retailers faced this holiday season.

Already, Federated Department Stores, Wal-Mart Stores Inc. and jeweler Zale Corp. warned Tuesday that revenues for December will fall below expectations.

Just how much impact this weaker-than-expected Christmas will have on retailers and what it means for the U.S. economy as a whole are not yet known. But predictions are hardly positive.

``A weak Christmas is a precursor of next year's economic performance,'' said Michael Niemera, vice president of the Bank of Tokyo-Mitsubishi Ltd. Niemera on Tuesday said he expects holiday sales to be up 3.5 percent from year-ago levels, reducing his earlier forecast of 4 percent.

Another sign of sluggish consumerism was seen in data released by TeleCheck Services Inc., a check approval service. TeleCheck said the number of sales paid for by check as of Sunday was up only 3.1 percent this year, a decline of roughly 50 percent from year-ago figures. In 1999, the season showed a 6.2 percent gain from the prior year.

Consumer spending accounts for about two-thirds of the nation's economic activity, and holiday sales typically represent 25 percent of retailers' annual sales.

Part of the problem this year, Niemera said, is that there are too many stores to serve a declining consumer demand.

``I think we are going to see more problems ahead for 2001, with store closings and liquidations,'' he said.

Still, retailers are pinning their hopes on people like Theodore and Eric Frett of Boston, a father and son team who have made shopping on Dec. 26 an annual ritual.

The pair was searching for clothes, CDs and DVDs at the Downtown Crossing Shopping District.

``We were out with the die-hard shoppers hoping to beat the crowds,'' said Eric Frett. ``The crowds weren't too bad this morning, but we were here before the stores opened.''

Suzanne Mulvaney, from Pittsburgh, was found digging through sets of sheets piled in a clearance bin marked 50 percent off at Kaufmanns, which was packed with post-Christmas shoppers.

``I'm here for bargains,'' she said, clutching four sheet sets. ``I come here all the time, not just the week after Christmas. But the prices get much better and it's worth getting through the crowds.''

There were pockets of light traffic in some malls on Tuesday, and John Konarski, vice president of research at The International Council of Shopping Centers, expects it will pick up.

Sales generated this week could give stores ``the final push'' to eke out sales needed to make their revenue goals for the month and season, he said.

The seven days after Christmas could account anywhere from 11 to 15 percent of holiday sales, according to analysts.

Konarski is heartened by the council's latest study, which revealed on Tuesday that sales for mall-based stores are up 2.2 percent for the season to date through Sunday, boosted by a 31.4 percent surge in revenues last week. The previous reports had been showing declining sales from the year-ago period.

But retailers continue to be stymied by high gasoline prices, stock market volatility and an overall economic slowdown, which have made consumers spend less frivolously.

Consumers' decreasing appetite for luxury items have hurt merchants like Joseph Saeidian, who operates a jewelry and gift shop in Boston's Fanueil Hall. His sales are down 30 percent from a year ago.

``It was very, very, very slow,'' Saeidian said. ``I might be late paying my bills.''

Zale Corp., North America's largest jeweler, said Tuesday that it now expects sales at its stores open at least one year, known as same-store sales, to be down 3 to 4 percent for the combined November and December months.

Wal-Mart Stores now projects sales to fall below its 3 to 5 percent sales range for December, and Federated Department Stores warned that same-store sales will be up anywhere from 1 to 2 percent, instead of the 3 percent increase originally projected.

Kurt Barnard, publisher of the Barnard Trend Report, based in Upper Montclair, N.J, said the past weekend's sales surge was too little, too late, and now retailers are ``just trying to get rid of inventory, much of it at not much profit.''

Online sales have turned out to be disappointing, as well. Consumers spent $5.29 billion at online sites, excluding travel, between Nov. 24 through Sunday, according to BizRate.com, a research firm. That represents a 57.9 percent increase from a year ago, falling short of the projected 80 percent gain.

Now, many online retailers are turning to clearing out their merchandise. Yahoo! Shopping, which reported that order volume nearly doubled for the holiday period from a year ago, has set up a post-holiday clearance center partly because many more merchants are offering discounts. Etoys Inc., which reported a dramatic shortfall in holiday sales, is offering discounts of up to 75 percent.