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By
Reuters
Published
Sep 16, 2012
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Retailers see a somewhat jolly US holiday season

By
Reuters
Published
Sep 16, 2012

NEW YORK - It's beginning to look a lot like last Christmas.

Early insights from retailers and industry experts suggest U.S. sales should rise this holiday season about as much as they did in November and December 2011, as cautious optimism persists despite high unemployment and uncertainty over the presidential election.



Photo: Corbis


Sales have risen by a single-digit percentage in each of the past two years. That is expected to continue this year.

"What we're seeing right now is what I would call 'tempered enthusiasm,'" HSN Inc (HSNI.O) Chief Executive Mindy Grossman told the Reuters Retail and Consumer Summit. "When the product is right it's differentiated, it's compelling, there's absolute engagement. But it's not unbridled."

Sales during November and December are critical for many retailers, as shoppers buying gifts and purchasing items for themselves complete a large part of their yearly shopping. The season can make or break a company's annual results, accounting for one-third of annual sales in many cases.

"Our preliminary forecast right now for holiday is going to look very similar to last year," said Monica Aggarwal, Fitch Ratings senior director and head of the U.S. retail team. "We're looking for about a 3 to 4 percent increase in overall retail spending for this year."

That leaves retailers with the task of choosing the right items to stock and making sure they do not order too much, to avoid having to take unplanned discounts that cut into profits.

"My guess is it's going to be a better Christmas than last year and my guess is the inventories of the retailers is in line, so there won't be any massive mark downs like there was four years ago, five years ago," said Tanger Factory Outlet Centers Inc (SKT.N) CEO Steve Tanger. "I think it will be a better Christmas than people think."

ShopperTrak, which makes sales projections based on shopper visits to U.S. stores, forecast on September 12 that U.S. retail sales should rise 3.3 percent this holiday season after seeing a 3.7 percent rise in 2010. It expects visits to stores to rise 2.8 percent during November and December, which it said would be the first increase in shopper traffic since 2007.

TIME TO ACCESSORIZE

Accessories are poised do well again this holiday season.

"The accessory trend has been phenomenal. Handbags, footwear, jewelry - those particular categories have been very strong and I expect that those categories will continue to have momentum going into the holiday season," said Richard Dickson, president and CEO of the branded business at Jones Group Inc (JNY.N). "I think apparel will be good, I think accessories will be stronger."

Tumi Holdings Inc (TUMI.N), known for luxury luggage and accessories, has put more gift items into its line over the past three holiday seasons and will add more this year, such as colorful cases for iPads. In 2011, fourth quarter net sales represented about 32 percent of Tumi's annual sales and 42 percent of operating income.

"Funny enough, people actually give briefcases and luggage as Christmas presents, don't ask me why," said Tumi CEO Jerome Griffith.

One new item on this retailer's holiday list this year is a wristlet just big enough to stash an iPhone and a credit card, an idea prompted by Griffith's 20-year old daughter.

Shoppers in the luxury sector are honing in on exactly what they want, but are still spending, executives said.

"The consumer doesn't seem to have changed how she's been approaching shopping since we came out of the recession," said Karen Katz, CEO of high-end department store operator Neiman Marcus Group Inc NMRCUS.UL. "She's been very deliberate, wants things that are special, unique and somewhat exclusive, and she's not buying things if she already owns them in her closet."

While Neiman Marcus does not give forecasts, competitor Saks Inc (SKS.N) sees a mid-single digit percentage gain in sales for the second half of the year.

"We're looking at a relatively solid environment," Saks CEO Steve Sadove told Reuters on Monday. "At the higher end, the consumer hasn't fallen by any means off of a cliff."

Still, some U.S. luxury brands including Tiffany & Co (TIF.N) and Ralph Lauren Corp (RL.N) sounded a cautious note about the coming months because of the threat of a slowdown in Europe and China. Those signals were prominently followed by Britain's Burberry Group Plc (BRBY.L)

EARLY DAYS

While companies such as Neiman Marcus and Tanger have had decades to work on their holiday strategies, recent startup companies such as LivingSocial are still in their infancy when it comes to the big season.

LivingSocial CEO and Co-Founder Tim O'Shaughnessy says his daily and local deals company will improve this holiday season over its first two.

When the season goes into full swing on the day after Thanksgiving, "there is just so much noise on Black Friday that really going and cutting through that in a meaningful way was harder than we thought," O'Shaughnessy said.

Its work in late December in the days just before Christmas also could use a bit of tweaking, he said.

"We didn't do a good job of figuring out how you play into that last minute cycle," O'Shaughnessy said. "We're going to try and solve that this year."

(For other news from Reuters Retail and Consumer Summit, click here)

(Reporting by Jessica Wohl and the Reuters U.S. retail team in New York. Editing by Andre Grenon)

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