For retailers, holiday season is like a make-or-break time. This year, there was buoyancy brought on by factors like the seasonally crisp weather and positive marketing messaging among retailers. Planalytics, which provides weather analytics for businesses, too says that December 2016 was actually cold, especially in eastern states which benefited the apparel stores by an estimated US $ 309 million compared with last year. Yet, retail experts caution analysts not to be fooled by rosy retail holiday sales reports. It’s true that the sector finished well, but not everyone benefited, and 2017 won’t be rosy for all.
Though clothing is the top selling item during the period, but November and December now account for less than 21 per cent of annual retail sales at physical stores, down from a peak of over 25 per cent, and experts believe it’ll keep dropping. GAP and Polo Ralph Lauren were positive during this season while Macy’s Inc. and Kohl’s Corp. cut their 2016 profit forecasts after holiday season sales fell more than expected. J.Crew, Under Armour, Nike and Adidas are also losers of the season.
GAP Inc.’s net sales were up 1 per cent in the months of November and December 2016 compared to last year. Its comparable sales stood at positive 2 per cent for the mentioned period as against previous year. “We’re pleased with the improved momentum we saw over the holiday season, driven primarily by a positive customer response at Gap and Old Navy,” said Sabrina Simmons, CFO of the company. However, comparable sales for Banana Republic Global were down 7 per cent versus a negative 9 per cent for the same period last year; and Old Navy Global stood at positive 12 per cent when compared to negative 7 per cent last year. On the other hand, GAP Global generated positive one per cent comparable sales against negative 2 per cent last year for the reporting period.
Kohl’s sales were volatile throughout the holiday season, even though it saw strong sales on Black Friday and the week before Christmas. The company reported its comparable sales decrease by 2.1 per cent in the same period. Also, the company’s total sales for the above-mentioned period declined 2.7 per cent. Men’s, home and footwear were the strongest categories while accessories segment was the most challenging. On a regional basis, the Southeast, Mid-Atlantic and Northeast were the best performing regions. The company’s gross margin is also projected to be lower than planned due to the mix and timing of the sales and the competitive promotional environment.
JCPenney’s comparable store sales for the nine-week period of November and December declined 0.8 per cent as against the corresponding period of last year, which equates to a 3.1 per cent positive two-year stack of comparable store sales for the same time period. At Stein Mart boutique-style men and women’s department store chain’s comparable-store sales for the nine-week period ended Dec 31, 2016 declined 4.8 per cent, while total sales fell 1.9 per cent compared with the prior year period. Challenges are mounting at department store retailer Hudson’s Bay Co. amid a disappointing holiday season as it lowered its full-year outlook for a second time.
Retailers weren’t panicking at the end of the holiday season. According to the research firm Conlumino, although the average apparel discount ticked slightly higher to 31.3 per cent in December last, the average amount of clothing on sale dropped nearly 8 percentage points, to 50.2 per cent.
Online versus Offline, heavy job loss…
Based on examined proprietary transaction data on payment cards for its analysis, reviewing more than 940,000 merchant locations in the US, SpendTrend holiday season 2016 report from First Data, the western US states had the fastest growth in sales at brick-and-mortar stores this holiday season as it experienced 4.8 per cent year-over-year sales growth during the holiday season. The southern states, in contrast, saw bricks-and-mortar sales decrease by 0.6 per cent. Amazon.com Inc. also said that it shipped more than 1 billion items worldwide this holiday season and called it ‘best ever’. But some of the known apparel retailers are on opposite track and growing online and closing there stores due to this. It is resulting into job loss which is always a big concern in US economy. Macy’s Inc. and The Limited are cutting jobs, and closing stores due to this. JCPenney also noticed that e-commerce business performed strongly as evidenced by double-digit growth.
It is pertinent to mention here that Macy’s comparable sales in November and December declined by 2.7 per cent at company-owned stores. Women’s apparel retailer, The Limited is going to close all of its stores across which will affect about 4,000 jobs, including temporary ones. The brand is planning to sell the merchandise solely online. It grew to more than 700 stores in the 1990s but pared its store count in recent years. Subsequently, in 2016, the chain operated 250 stores. The retailer is one of several retail chains that have recently seen reverse trend as consumers increasingly buy merchandise online.
Reacting on the same, Marvin R. Ellison, Chairman and CEO, JCPenney says, “E-commerce business performed strongly as evidenced by double-digit growth. This validates the strength of our omni channel strategy with our efforts to improve site functionality, expand fulfilment capabilities, offering flexible shipping options, and introducing a broad assortment of new product categories instrumental to this digital sales growth. As we prepare for a new fiscal year, our turnaround in profitability remains on track, and I am pleased that we expect to deliver our fourth consecutive quarter of positive operating profit.”