Market Talk

The Black Friday hoopla has died down, and now it’s just the waiting until the holidays are over and we find out how the retailers fared. But here’s a hint, from Newswires’ Karen Talley:

US consumers may be a little spent from their holiday shopping after greeting the season in November by strongly spending. December intentions are down from last year, a Consumer Reports survey shows. “The consumer may not be confident enough to continue spending through the holiday season,” spokesman Ed Farrell says. “It may require deep discounting from retailers to get consumers back to the store in the final weeks of the month.”

Somehow I imagine retailers will do whatever it takes to get people in the doors and out again loaded down with shopping bags, but the profit margins will take a big hit to make that happen. No matter, the holidays will be declared a success, the stock market will rise, they’ll call it the Santa Claus rally, and we’ll all march happily on on our way.

Bah, humbug.

Between soundings on retail sales and reports on the manufacturing sector, seems like more of the data we’re seeing supports the “fits and starts” thesis to the recovery, rather than the V-shaped thesis. We shall see, of course, but for now, here’s tomorrow’s news today.

Not exactly a gangbuster season.

So MasterCard got the jump on everybody, reporting already, via its SpendingPulse unit, that holiday sales were up 3.6% this year over last year.

By getting out there early, MasterCard makes sure they get their name in the papers. And while the report is a reliable indicator, it’s not a definitive source.

In the next few weeks, there will be other reports on the season, with the biggies coming from the National Retail Federation and the government “official” sales report . Of course, there’s also the financial statements from retailers themselves.

While a 3.6% increase sounds good, it isn’t doing much for Wall Street this morning. Consumer discretionary stocks are up a hair, and consumer staples stocks are down a hair. Retail information provider NPD Group characterizes holiday shopping as “adequate.”

“All in all, ” the firm’s chief industry analyst Marshal Cohen says, “Holiday 2009 was good enough, but has a long way to go with catching up to what the consumer really wants.”

Anecdotal reports coming in confirm the general sense that this year’s holiday sales were better than last year’s dismal season, but they weren’t exactly gangbusters, despite the doorbusters.

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Here they come...here they come...

Like I wrote last night, the more news that comes in about retail sales, the more it seems like the weekend snowstorm did have an effect on sales, and retailers are going to be hard pressed to match even last year’s sullen haul.

Redbook Research this morning noted that sales through the first three weeks of December rose 1.5% from a year ago. But they were expected to be up 2.1%, which means retailers will have to work that much harder to make their numbers.

“With three weeks gone from the five-week month, retailers are increasingly hedging their sales forecasts for December, indicating that the finish will have to be considerably stronger than originally assumed in order to bring them on target, Redbook says,” Newswires Karen Talley wrote this morning.

But that could be harder than expected, Reuters reports: “The heavy snowstorm that swept the East Coast of the United States over the weekend may have cost retailers the potential for any upside to holiday sales, industry experts said on Monday.”

That may drive retailers to bust out the heavy discounts that they’d hoped to avoid this year. Talley also wrote this morning that Gap is already “pulling the trigger,” offering 60% discounts on some items, as well as a host of other discounts. Talley said a salesperson at a Gap store on 6th Avenue in midtown Manhattan (across the street from our office, as it happens) said the store has signs on hand that offer bigger discounts, and “it’s up to corporate” to decide if they’re brought out.

Remember, last year was the first year in about four decades that holiday sales dropped, and if memory serves correctly, they’ve never fallen two years in a row. That’s the depressing mark retailers hope to avoid.

Addendum: Talley’s been working overtime on this one, and here’s her latest out just this afternoon:

Retailers lost billions of dollars in business on so-called Super Saturday because of the big East Coast storm, but other parts of the country also struggled that day. US retail sales fell to $6.9B from $7.9B last year, with the 12.6% decline the biggest since ShopperTrak began gathering the data in 2002. The Northeast saw a 17% decline on Saturday, and the South a 15% drop. But areas not affected by the big storms also saw declines, with sales in the Midwest dropping 10% and 7% in the West, ShopperTrak said.

We’re starting to get the damage report from the weekend’s snowstorm on the east coast, in terms of how it affected holiday sales, and it’s not very good. From the Journal:

The conditions cost retailers an estimated $2 billion in sales, according to weather consultancy Planalytics, which devises its estimate by modeling sales for a clear day and subtracting sales from stores based on how affected they were by the weather.

Michael Niemira, chief economist at the International Council of Shopping Centers, says there was a significant hit to sales this weekend, but some of the sales may have shifted online and others to periods before and after the storm.

“Super Saturday,” the last Saturday before Christmas, saw $15.1 billion in sales last year, according to Mastercard Inc.’s SpendingPulse unit.

“Retailers got hit right at crunch time,” says Todd Slater of Lazard Capital Markets.

Retailers are now hoping for a last-minute surge of shoppers before Friday, as more than 40% of consumers still have shopping to do, more than double last year’s figure at this time, according to a survey from America’s Research Group and UBS.

Remember, nobody expects holiday sales this year to be any great shakes to begin with. If sales are up from a year ago, well, they’re coming off the worst holiday season in four decades. If they’re flat, or even down as the National Retail Federation expects, then that’s even worse.

Today on Tomorrow’s News Today, we talk about the evolving Dubai World story (perhaps I should say “revolving,”) disappointing retail sales and good signs from manufacturing reports.

Can you believe? I got this blu-ray player 40% off.

“Black Friday” is the kind of thing that’s tailor-made for the news. All you have to do is send some reporters out to the stores, get a camera plunked by the front door, and let the mob do the rest. The story practically writes itself, year after year. It’s great publicity for the nation’s retailers, but as with most things, you need to dig a little deeper to get the truth.

This year, retailers supposedly were going to lay off the heavy discounts that marked last year. This year, with plenty of time to prepare for the “new normal,” they wouldn’t get stuck with a lot of merchandise they couldn’t move. But as the auto companies discovered back in 2002, once you get shoppers used to those discounts, it’s hard to wean them off, as the Journal reports:

Retailers succeeded in enticing deal-hungry shoppers into their stores on Friday, but at the checkout lines many people were sticking to the most deeply discounted items.

That may prove to be a disappointment to executives at the nation’s major chain stores, which have been battered by the recession. Many have been hoping that, once in the stores, consumers would spend a little more freely than they did a year ago.

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Yeah, it's the best Christmas ever.

Back when we were much younger, my best friend Rob and I used to do all our Christmas shopping on Dec. 24. We’d go to the mall, shop for three hours or however long it took, then go to the bar for a few drinks. It was a good way to put everything off to the last minute, still get it all done, and, well, have a good excuse for drinking.

I supposed I’ve changed over the years, although I still generally wait until the last minute to do my shopping (being a journalist, I really do need a deadline to get anything done.)  But it seems retailers have changed even more, and every year the holiday push begins just a little earlier.

But this year, it’s totally out of hand. I was in Sears two weeks ago, and they were selling fake trees and those lighted-deer lawn ornaments. Kohl’s and Target have already started selling some holiday merchandise. Wal-Mart, Target and Toys ‘R US are already engaged in price wars over toys.

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Karen Talley, who covers retail for Dow Jones, sent us the following bit of news for Market Talk (if you’re not aware, this blog is an offshoot of the Market Talk column we write for Dow Jones Newswires.)

MARKET TALK: Target Wants To Be Player For Holiday Toy Season

1:20 (Dow Jones) Target (TGT) joins the Christmas toy wars, cutting toy prices by as much as 50%, including GI Joe’s that will now go for $14.99 and Barbies for $5. The move follows Wal-Mart (WMT) saying last week it will offer more than 100 toys at $10 during the holidays and Toys R Us making a big Christmas push as well. TGT up 0.2% to $48.20. (KJT)

See that? It’s what, Oct. 7, and Target and Wal-Mart are already fighting for holiday sales. Not just setting up their strategies, not planning their pricing platforms, but they’re already slugging it out in the aisles. Forget that Christmas is nearly three months away; these guys don’t have three months to wait for you to buy a GI Joe.

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