
Blizzard Dumps on Big Retail Sales Day
NEW YORK (
) -- Retail has been red hot in 2010, but it's ending the year on a tundra of frozen sales.
The highly anticipated big post-Christmas sales rush was killed by the avalanche conditions, after as much as two-feet of snow blanketed the U.S. East Coast. The day after Christmas is usually one of the biggest shopping days of the year.
Americans, who customarily sink into a deep depression as the stroke of midnight passes on Dec. 25 -- when the thought first occurs that it will be a whole year before Christmas shopping begins again -- usually head right back out to the stores for post-holiday sales. Yet parking lots and shopping malls were nearly empty on Sunday and Monday, except for those who forgot to buy their snow gear this year.
The
SPDR S&P Retail ETF
(XRT) - Get Report
is up more than 34% this year -- and at a three-year high -- and investors haven't been selling off retail stocks and booking profits to end the year, a bullish sign from investors.
|
At least for the last week of the year, though, it didn't look like retailers would be selling much. This means that while retail stocks are doing just fine, the deep discounting already rampant across the retail sector may have one final leg in 2010, with retailers stepping up discounting in the coming days to make up for the lost blizzard sales.
Investors wondering whether to take profits in retail stocks may see yet another, and unexpected round of discounting, as a reason to doubt how low retailers can go before profits start to feel a chill.
The good news was that unlike last year, when a blizzard shut down the retail sector right before Christmas, the post-Christmas blizzard could mean a delay in shopping as opposed to a permanent loss of sales.
Consumer spending may be backed up into January, Marshal Cohen, chief industry analyst at NPD Group, told
Bloomberg
.
Greg Maloney, CEO of the retail practice of Jones Lang LaSalle, told the
AP
that fears of a major retail sector devastation were misguided. The Jones Lang LaSalle executive said that December revenue is expected to be up by as much as 10% last year, and told the
AP
that revenue rose by as much as 15% the week before Christmas.
Indeed, the best performance from the retail stock sector since 2007 not coincidentally has occurred alongside the highest holiday season spending since 2007.
Yet, while the week of Dec. 26-Jan. 1 makes up less than 10% of the Nov 1-Dec. 31 season, it does account for more than 15% of holiday spending, according to research firm ShopperTrak, quoted in the
AP
report.
The day after Christmas, in particular, was the second-highest revenue day for retailers last year with $7.9 billion spent, according to ShopperTrak data quoted in the
AP
report.
Consumer confidence in the U.S. has been increasing, and last month the National Retail Federation boosted its holiday retail sales forecast by 1 percentage point. This figure could actually come in lower if the blizzard has a lasting impact on sales goals.
Robin Lewis, the co-author of
The New Rules of Retail Sales
took a more pessimistic view of the blizzard and its impact on brick-and-mortar retail on
CNBC
on Monday. Lewis said that while online retailers like
Amazon
(AMZN) - Get Report
would benefit from the blizzard keeping shoppers at home and in front of the flat panel displays, big department store stocks like Macy's would not be able to make up sales lost as a result of the blizzard.
Some big-name retail stocks were down on Monday, but so were the markets. Although the SPDR S&P Retail ETF was down close 1%, and the department stores were falling, retail stocks were not among the market's big losers on Monday morning. The broad markets were down by less than 0.5%.
Macy's
(M) - Get Report
,
Nordstrom
(JWN) - Get Report
,
Saks
(SKS)
and
J.C. Penny
(JCP) - Get Report
were all down on Monday at mid-day, with Nordstrom and Saks leading losses, down 1.7% and 1% respectively.
By mid-day Monday, most of the retail stocks, including
Sears
(SHLD)
were down less than 0.5%, in line with the broad market losses.
Losses in many retailers were small, at less than one percent -- and at least one big name retail stock that has been a big performer in 2010:
Abercrombie & Fitch
(ANF) - Get Report
-- up 64% this year - was flat in trading on Monday.
-- Written by Eric Rosenbaum from New York.
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