Post by blueneck on Feb 8, 2008 20:07:59 GMT -6
From the New York Times
Weak January Dashed Retailers’ Gift-Card Hopes
Published: February 8, 2008
Here is a sign of how shaky the economy is becoming: Wal-Mart says its shoppers are redeeming their holiday gift cards for basic items — pasta sauce, diapers, laundry detergent — rather than iPods and DVDs.
Retail Sales Merchants had hoped that shoppers with gift cards would provide a lift after a slack holiday season, partly because they tend to spend more than the value of the card. But that did not seem to happen last month, and retailers are feeling the pain.
On Thursday, the nation’s retailers turned in their worst January in almost four decades as high gasoline and food prices, the slumping housing market, tighter credit and tougher job prospects pushed some consumers to the edge.
Sales at 43 retailers surveyed by the UBS-International Council of Shopping Centers rose just 0.5 percent in January, well below a forecast of 1.5 percent.
The results, based on same-store sales — those at stores open at least a year — followed a 0.7 percent growth pace in December and were below the 2.1 percent gain for all of 2007.
“Gift cards are being used as a secondary way to save,” said Burt P. Flickinger III, managing director of the Strategic Resource Group, a retail consulting firm in New York.
Even at department stores, he said, consumers are using gift cards to buy basic apparel like socks and lingerie.
The information from Wal-Mart Stores, the world’s largest retailer, that gift card redemptions were below expectations and people were buying only necessities shook up industry analysts. Retailers record gift-card revenue only when the cards are redeemed.
“It shows you the level of worry,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. Even with money in their hands, he said, consumers were not willing to spend on anything more than necessities.
Still, the share prices of several retailers rose Thursday as many either confirmed their earnings forecasts or raised them, signaling that they were able to control their inventories.
Hot Topic and Wal-Mart stuck with their outlooks, while Pacific Sunwear of California, Wet Seal and Gap raised their profit guidance despite lower sales.
Department stores and mall-based apparel retailers, though, posted steep sales declines. At J. C. Penney, same-store sales at its department stores dropped 1.9 percent, though that was better than the 6.3 percent decline expected in a Thomson Financial analyst survey.
Nordstrom reported a 6.6 percent decline in same-store sales, much worse than the 0.7 percent decrease expected.
Macy’s had already reported a 7.1 percent decrease in same-store sales on Wednesday, worse than expected. A spokesman, Jim Sluzewski, acknowledged that gift-card sales and redemptions were weaker than last year, reflecting a slower sales trend over all. Macy’s does not track how shoppers use their gift cards.
Saks fared better, saying that same-store sales rose 4.1 percent, better than the 2.2 percent estimate. But the retailer said shoppers were shifting more of their spending to sale merchandise.
Discount retailers have held up better as higher-income shoppers opt for less expensive stores. But their traditional customers are cutting back as well. Target reported a 1.1 percent decline in same-store sales in January, worse than the 0.6 percent decline that analysts expected.
Wal-Mart reported a 0.5 percent gain in same-store sales, sharply lower than the 2 percent increase expected. The company said it continued to do well with basics like groceries, but home furnishings remained weak.
www.nytimes.com/2008/02/08/business/08shop.html?_r=1&ex=1360126800&en=d0d8b847f82cbe37&ei=5088&partner=rssnyt&emc=rss&oref=slogin
Weak January Dashed Retailers’ Gift-Card Hopes
Published: February 8, 2008
Here is a sign of how shaky the economy is becoming: Wal-Mart says its shoppers are redeeming their holiday gift cards for basic items — pasta sauce, diapers, laundry detergent — rather than iPods and DVDs.
Retail Sales Merchants had hoped that shoppers with gift cards would provide a lift after a slack holiday season, partly because they tend to spend more than the value of the card. But that did not seem to happen last month, and retailers are feeling the pain.
On Thursday, the nation’s retailers turned in their worst January in almost four decades as high gasoline and food prices, the slumping housing market, tighter credit and tougher job prospects pushed some consumers to the edge.
Sales at 43 retailers surveyed by the UBS-International Council of Shopping Centers rose just 0.5 percent in January, well below a forecast of 1.5 percent.
The results, based on same-store sales — those at stores open at least a year — followed a 0.7 percent growth pace in December and were below the 2.1 percent gain for all of 2007.
“Gift cards are being used as a secondary way to save,” said Burt P. Flickinger III, managing director of the Strategic Resource Group, a retail consulting firm in New York.
Even at department stores, he said, consumers are using gift cards to buy basic apparel like socks and lingerie.
The information from Wal-Mart Stores, the world’s largest retailer, that gift card redemptions were below expectations and people were buying only necessities shook up industry analysts. Retailers record gift-card revenue only when the cards are redeemed.
“It shows you the level of worry,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. Even with money in their hands, he said, consumers were not willing to spend on anything more than necessities.
Still, the share prices of several retailers rose Thursday as many either confirmed their earnings forecasts or raised them, signaling that they were able to control their inventories.
Hot Topic and Wal-Mart stuck with their outlooks, while Pacific Sunwear of California, Wet Seal and Gap raised their profit guidance despite lower sales.
Department stores and mall-based apparel retailers, though, posted steep sales declines. At J. C. Penney, same-store sales at its department stores dropped 1.9 percent, though that was better than the 6.3 percent decline expected in a Thomson Financial analyst survey.
Nordstrom reported a 6.6 percent decline in same-store sales, much worse than the 0.7 percent decrease expected.
Macy’s had already reported a 7.1 percent decrease in same-store sales on Wednesday, worse than expected. A spokesman, Jim Sluzewski, acknowledged that gift-card sales and redemptions were weaker than last year, reflecting a slower sales trend over all. Macy’s does not track how shoppers use their gift cards.
Saks fared better, saying that same-store sales rose 4.1 percent, better than the 2.2 percent estimate. But the retailer said shoppers were shifting more of their spending to sale merchandise.
Discount retailers have held up better as higher-income shoppers opt for less expensive stores. But their traditional customers are cutting back as well. Target reported a 1.1 percent decline in same-store sales in January, worse than the 0.6 percent decline that analysts expected.
Wal-Mart reported a 0.5 percent gain in same-store sales, sharply lower than the 2 percent increase expected. The company said it continued to do well with basics like groceries, but home furnishings remained weak.
www.nytimes.com/2008/02/08/business/08shop.html?_r=1&ex=1360126800&en=d0d8b847f82cbe37&ei=5088&partner=rssnyt&emc=rss&oref=slogin