It All Comes Down to This -- December Sales Key for Retailers
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After roughing it through a not so glorious new Black Friday, some department store retailers are now ratcheting up their marketing efforts in hopes of luring enough shoppers to end this holiday shopping season on a high note. However, others have yet to announce any major sales efforts, which could spell the difference between how well they do compared to their peers.
I say new Black Friday because sales that had traditionally been launched on the Friday following Thanksgiving began on Thursday this year for more retailers, including department stores. Even with the day earlier start, and longer hours, retailers still reported dismal same-store sales for the month of November.
Retailers blamed Hurricane Sandy for their lackluster sales in November – a key month in which retailers gain most of their revenues for the year. Shoppers in the Northeast were basically held hostage in their homes following the devastating storm. Repairing storm damage took precedent over holiday shopping for many. Barring no catastrophic events like that storm, the retailers that are more strongly positioned should pull through this month and report fourth quarter sales that trump those for the same period from a year ago. Their marketing efforts will prove to be crucial in making that happen.
One of the more ambitious marketing efforts comes from Macy’s (NYSE: M). For last-minute shoppers, Macy’s will be open 48 hours straight the weekend before Christmas. I can hear the complaints mounting now similar to the ones lobbed by workers who had to labor on Thanksgiving Day. In the long-run, the marathon hours should bode well for the department store chain and should be enough to keep it on track to meet its fourth quarter sales and earnings goals.
Company officials say they are on track to do so, even though same-store sales for November were down .7% compared to November 2011. They totaled $2.4 billion. Macy’s expects same-store sales for this quarter to be up by about 4.2%. Earnings per share should be between $1.94 and $1.99. So we’ll see if the country’s second largest department store will be able to pull off these numbers. When the disappointing November same store sales came in, the stock’s price dropped the most it has in 20 years.
As part of its holiday marketing efforts, Kohl’s (NYSE: KSS) continues to promote its hassle-free return policy. Simply, customers can return any item, any time, for any reason, with or without a receipt. This concept should go a long way for Kohl’s in attracting shoppers, considering the pain it can be when shoppers try to return unwanted gifts.
For November, Kohl’s same store sales dropped 5.6% to $1.8 billion. No guidance was issued when the same store sales were announced.
Then there is J.C. Penney (NYSE: JCP). Who knows what, if any, marketing strategy this department store will roll out? All of this year, it has been all over the place when it comes to offering sales or discounts as CEO Ron Johnson has tried to revamp the chain. The original change called for the doing away with sales and coupons, and replacing them with an “everyday low price” policy. However, for Black Friday it promoted what it called “its only sale of the year.” There has been a succession of other sales since then.
Observers clearly see that Johnson is backing away from the “everyday low price” policy because it was alienating more shoppers than it was attracting. The concern now is that the changes could backfire as customers grow weary of the constant changes in sales policies.
We have no idea whether J.C. Penney’s one big sale of the year, or any other promotion for that matter, helped it to stymie its same store sales losses. It hasn’t released any numbers and it is unclear if it will.
To further drive home the importance of December for the stores in the retail sector, consider this. Historically, December sales have made up about half of fourth quarter sales. Fourth quarter sales have accounted for 20% to 30% of a retailer’s entire year of revenue.
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