Dec 20, 2009
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Storm threatens retailers' last holiday push

Dec 20, 2009

LOS ANGELES/CHICAGO (Reuters) - U.S. retailers' final weekend sales push before Christmas was under threat as a severe winter snowstorm struck the East Coast, forcing store closures and keeping shoppers at home on "Super Saturday."

The last Saturday before Christmas typically accounts for about $15 billion in retail sales, and analysts said the U.S. Northeast contributed around 30 percent of that amount.

It often vies with Black Friday, the day after U.S. Thanksgiving, as the biggest single sales day of the holiday season, and some analysts say a weak result could force retailers to slash prices in the run-up to December 25.

By Saturday (19 December) evening, the storm blanketed the Baltimore-Washington area with snow and forced the closure of many stores and at least one area mall. It could bring blizzard conditions to other major shopping areas like New York and Boston. The National Weather Service warned of "extremely treacherous" travel conditions throughout the region stretching from the mid-Atlantic to the Northeast.

Only half of the stores in Taubman Centers Inc's three Virginia malls were open because bad road conditions prevented staff from getting to work. One of those malls, in the Washington suburb of Fairfax, will close at least five hours early due to weather, said spokeswoman Karen Mac Donald.

"The one thing a retailer doesn't want is a major snowstorm on the Saturday before Christmas," said Marshal Cohen, chief industry analyst at the NPD Group.

"The weather this year is like Bernie Madoff last year. A terrible ending to a terrible year," said Shawn Kravetz, president of hedge fund Esplanade Capital. "The timing is brutal."


Trend spotter Marian Salzman said she saw empty streets and parking lots as she checked stores at midday in Connecticut.

At a Wal-Mart store in southwestern Connecticut, snow shovels and ice salt were in greater demand than holiday gifts, said Salzman, president of Euro RSCG Worldwide PR.

"Yesterday and today we did see increased demand for weather-related products like shovels and ice melt in our stores in the Northeast," said Walmart spokesman David Tovar, who declined to comment on specific sales data.

Analysts said the severe weather could depress sales on Saturday 19 December at retailers with a large presence in the Northeast, including Saks Inc, Macy's Inc and American Eagle Outfitters Inc.

They expect some shoppers will venture to stores on Sunday 20 December, while others will settle in at home and shop online.

That latter scenario could be a boon for retailers ranging from Amazon.com, Target Corp and Walmart to electronics retailer Best Buy Co Inc, but consumers may have to pay unwanted last-minute shipping fees to guarantee that gifts arrive by Christmas.

Peter Morici, a professor at the University of Maryland's Smith School of Business, said independent retailers and brands that are weak online were most vulnerable -- including Macy's, J.C. Penney and Ann Taylor.

Even before the storm, nobody was predicting a stellar year for holiday sales as consumers are still face pressure from a double-digit unemployment rate and a weak economy.

"I am spending less on each gift but I am not cutting anyone off my list," said Gwynne Nemcek, an administrator at New York University, who was shopping in Manhattan.


Retailers have worked to avoid a repeat of last year, when a global economic meltdown left them buried in excess merchandise and desperate to make a sale at almost any price.

Last year, it was not uncommon to see stores advertising 70 to 80 percent off. So far, this year's cuts have not been so deep -- often in the range of 30 to 50 percent.

"Next week, watch for prices to come down. They have to get rid of this stuff," said Morici, who predicted the weak economy and recent bad weather would drive further markdowns.

Holiday sales forecasts have narrowed over the course of the shopping season to a range of down 1 percent to up 1 percent from 2008, when sales fell for the first time since the National Retail Federation started tracking the data.

Salzman said she expected sales would be down more than 1 percent. "It feels like nobody's interested or around or engaged."

Morici said the holiday results would be weak.

"We've had some inflation, so as a consequence, if you're up 1 (percent), you're really down 1 (percent)," said Morici. "Even if it's up 1 percent, it's really a rather pathetic showing and it indicates an economy in grave trouble."

(Reporting by Lisa Baertlein in Los Angeles, Jennifer Ablan, Phil Wahba, Dhanya Skariachan and Nicole Maestri in New York and Jessica Wohl and Ben Klayman in Chicago; Editing by Peter Cooney)

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