Business

Retailers on pace for best holiday since 2006

NEW YORK — Aided by increased promotions and last-minute shoppers hitting the stores in the final days before Christmas, retailers look to be on track for the best season for holiday sales since at least 2006.

Chain-store sales for the week ended Dec. 18 rose 4.2 percent from the year-earlier period, the best performance in at least 10 weeks, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales gained 1.7 percent, also the best since at least mid-October.

Meanwhile, sales results for Dec. 18 — Super Saturday, in retail-industry parlance — saw a 15 percent increase in sales with foot traffic running 10 percent higher, according to ShopperTrak.

That compared against a 16.5 percent drop in sales last year. This past Saturday is on track to be the No. 3 sales day of the holiday season, after Dec. 23 and Black Friday, the day after Thanksgiving, ShopperTrak said.

As the race to the Christmas finish line reaches its final hours, retailers such as Toys R Us and Macy's are keeping their doors open 24 hours all the way through Christmas Eve to entice last-minute shoppers.

Meanwhile, promotions, both targeted and unplanned, have heated up as retailers added 11th-hour marketing wrinkles to spur spending.

"Retail shopping trends are shaping up to be very favorable for holiday sales, as well as December sales performance, for retailers," said Michael Niemira, chief economist of the International Council of Shopping Centers.

Holiday gift spending surged over the past week, with 73.9 percent of consumers, on average, completing their shopping, up from 56.6 percent in the prior week, said Niemira.

The shopping-center trade group recently raised its November and December holiday-season forecast by 0.5 of a percentage point, to 3.5 percent to 4 percent or potentially slightly better above that range — a performance that it said would be the best since at least 2006. Other trade groups including the National Retail Federation have also raised their holiday outlooks.

The race will continue right down through the final instant: One out of seven consumers plan to shop on Christmas Eve this year, led by men and those 18 to 34 years old, Niemira said. About one-fifth of the shoppers said they'd be out spending on Dec. 26 as well, the ICSC-Goldman Sachs survey showed.

For instance, Abercrombie & Fitch has ramped up its promotional level to 40 percent off everything in stores to draw last-minute traffic in. Rival Aeropostale is advertising after-Christmas prices now.

Walmart's promotions include a 14-megapixel Kodak digital camera for $59. Target's deals include Kung Zhu electronic fake hamsters at $3.99, a discount of more than 50 percent.

Best Buy, meanwhile, cut the price on a 32-inch Toshiba LCD high-definition TV by $100, to $299.99. The largest electronics retailer over the weekend also has removed its restocking fees.

"We saw an acceleration in blanket discounting this weekend," said analyst Liz Dunn of FBR Capital Markets. "This is absolutely to be expected."

Still, while retailers have kept their inventory levels lean to limit fallout from resorting to profit-eroding discounts, increased competition and accelerated promotions may eat into some stores' bottom line, analysts said.

"Our December pricing study continues to indicate competitive pricing wars among our teen retailers, placing significant pressure on margins," said Eric Beder of Brean Murray Carret & Co.

So far, other fresh data have continued to paint a picture of recovering consumers who are showing a greater willingness to open their wallets.

The Johnson Redbook Retail Sales Index showed sales rose 3.8 percent last week, following a 2.5 percent gain in the prior week. For the month to date, sales were up 3.3 percent, better than a targeted 3.2 percent increase, Johnson Redbook said.

Meanwhile, online sales also appeared to continue building momentum: Between Friday and Sunday, transactions at 50 large retailers selling online were up 46 percent with sales rising 33 percent. Both measures were above the season average, according to Chase Paymentech Pulse Index.

Separately, comScore data have showed online spending in the first 47 days of the November-December holiday season rising 12 percent to stand at $27.46 billion through Dec. 17. Sales in the most recent week ended Dec. 17 jumped 14 percent to $5.15 billion, with four individual days surpassing $900 million.

And on Dec. 17 alone, where more than 1,500 merchants offered free shipping, sales surged 61 percent to $942 million, comScore said.

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