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Christmas Helps Slumping Sales

Helped by last-minute Christmas shopping as consumers hit the markdown tables, same-store retail sales picked up by 3 percent during the fourth week of December, helping to close the month on a stronger note than it began, the Johnson Redbook Index reported.

The 3 percent increase improved on a 2.1 percent gain the prior week, and an even weaker 1.8 percent hike during the first week of December, as the holiday season got off to a disappointing start.

The biggest improvement was recorded at department stores, where same-store sales grew 2.2 percent, recovering from a skimpy gain of 0.4 percent the prior week. Discounters grew their sales by 3.7 percent, roughly flat with a 3.6 percent increase the preceding week.

But even with the pick-up during the fourth week, sales still came in beneath plan across all channels for the four weeks month-to-date, Redbook reported. Department store sales improved by 0.7 percent for the four-week period, beneath a target of 0.9 percent growth. And discounter sales rose by 3.5 percent, missing their target of a 4 percent increase.

“The week was uneven,” said Redbook analyst Catlin Levis, and “shoppers who had held back throughout the month came in a rush in the days leading to the 25th, continuing the trend of recent years. Some retailers attributed the slow start to the fact that Christmas was two days later than last year. The suggestion was that consumers had not used two extra days to pack in more shopping, but had simply rationed available demand over the entire period.”

Weather had a mixed effect on shopping patterns, said Levis. “In the Midwest, snowstorms slowed shopping until the end of the week.” But then “cold weather and markdowns helped boost sales of winter apparel, which had been slow all month.”

Breaking business out by category, Levis said, the primary focus during the fourth week “was on holiday seasonal business, which was dominated by gift and holiday categories, including toys, electronics, jewelry and home goods. Food was also a big seller for certain discount stores.”

Playing an increasingly important role in holiday giving, and ultimately shifting sales past the immediate holiday and into January, is the rapidly spreading use of gift cards, said the analyst. “Gift cards are on the rise more than expected. Consumers purchased their prepaid gift cards online or through local drug chains as well as grocery stores in order to avoid crowds and shipping delays.”

Complicating an assessment of Christmas sales, Levis said “Gift cards tend to hinder pre-Christmas revenues as sales are recorded when the cards are redeemed. Retailers have now shifted their merchandising focus to post-Christmas clearance. The last-minute Christmas rush was not enough to make up for many retailers' sub-par Christmas performance.”

Johnson Redbook Retail Sales Index
Fourth week of December

Week ended 12/4 12/11 12/18 12/25 1/1 Month Target
*Including chain stores and traditional department stores.
Source: Johnson Redbook Index
Department stores* -0.1 0.2 0.4 2.2 0.7 0.9
Discounters 3.4 3.5 3.6 3.7 3.5 4.0
Redbook Average 1.8 2.0 2.1 3.0 2.2 2.6


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