TheStreet reporter Brian Sozzi is visiting a dozen key retailers today and Black Friday to assess their performance during one of the biggest shopping events of the year.
Islip, NY ( TheStreet) - Once the early deal-seekers bagged their door-buster tablet or TV at Kmart on Thanksgiving morning, few others bothered to show up.
At four Kmart locations across the New York area, visited from opening at 6:00 a.m. until 11:00 a.m., a pattern of unsold hats, sweaters, toys, and holiday décor emerged. The low-income consumers that Kmart serves were not responding to the chain's 30% to 50% Thanksgiving Day discounts on such items.
Must Read: TheStreet's 36-Hour Black Friday 2014 Door-Buster Live Blog
Sears ( SHLD) may have overestimated demand for its holiday season, a thought not lost on one of the company's store employees. "I thought it would be busier," said a cashier who requested anonymity. Sears Holding Corporation did not return an email seeking comment on Kmart's inventory plans for the holidays.
Unsold inventory that will have to be aggressively marked down by Christmas is the last thing the Kmart chain needs. Kmart's gross profit margin for the first half of 2014 declined 230 basis points year-over-year, due in large part to sluggish sales in the apparel category. The business, which had 1,077 locations as of Aug. 2, lost $240 million in the first six-months of the year on $5.8 billion in sales.
To be sure, the first day of the unofficial start to the holiday shopping season is a small sample size. But for a business on life support like Kmart, a robust beginning would have been welcome news.
Kmart's Black Friday Scorecard
Number of stores visited: Four
Location: Long Island, NY
Time visited: 6:00 a.m. to 11:00 a.m.
Bag size (big bags means big items which mean more money for the retailer): Small, for those bags containing apparel. Shoppers leaving with large-screen electronics often just purchased that item.
Crowd size (how big are the crowds): Similar to Kmart Thanksgiving Day opening one year-ago. Slow after 8:00am.
Staff size (is there enough staff to handle the crowds): Adequate enough to handle the initial rush and ongoing stream of shoppers. On more than one occasion, staff was still stocking merchandise.
Out of stock areas (empty shelves): Kitchen goods. Sears has cut $1.7 billion from its inventory over the past three years.
Too much stock (overstocked on key items): Coats, sweaters, jeans, bicycles, toys, holiday décor.
Desperate promotions (discounts too big compared to competitors): Not yet. Apparel promotions mostly in a range of 30% to 50%.
Too much inventory in apparel. Kmart, Islip, NY.