Blog: Dismal December
Leonie Barrie | 14 January 2008
There were few signs of festive cheer in the US last week, as apparel chains revealed first figures for their sales over the Christmas period.
December – the most important month of the year for most retailers – was an overall disappointment as concerns about higher fuel and food costs, as well as declines in the credit and housing markets, led to lower traffic levels as consumers stayed away from the stores.
Analysts described it as the weakest holiday season since 2002, and even promotions, last-minute shopping and gift-card redemptions failed to uplift demand.
Department stores and specialty retailers were among the main losers. Gap, Kohl's, Limited Brands and Macy's missed analysts' forecasts, while Hot Topic, American Eagle Outfitters and Men's Wearhouse were among those who lowered their fourth-quarter profit forecasts.
Women’s apparel was one of the worst-performing areas, with a lack of strong fashion looks blamed for failing to excite shoppers with must-have trends.
Rare bright spots included discounters such as Wal-Mart Stores and off-price retailers Ross Stores and TJX Companies, which appealed to cash-strapped consumers seeking bargains.
There are now concerns that US retailers will have to continue to mark down sale merchandise as they try to clear unsold stock, and that this will not only put further pressure on profit margins but also lead to reductions in store personnel and even store closures.
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