Winners and losers of December shopping rush
January 5, 2011 by Katherine F. Swann · Leave a Comment
The analysts say that a good December does not necessarily mean a good year start for retailers. In the conditions that 70% of the US economy is ensured by consumers’ purchase, the fact that they show a greater preference for shopping in holiday season or back to school is not necessarily encouraging for the economy.
Doubtless, December 2010 was the first month that showed revilement after the recession, yet the predictions show that the shopping trend was occasional and generated by the consumers’ impulse for lavish shopping. The shopping basked in the following months shows a decrease.
But who were the winners and losers of the shopping rush?
Department stores such as Macy’s, J.C. Penney and Kohl’s are on top of the winners list. With unemployment still near 10%, discounters will continue to drive shoppers and they may report the biggest sales. There has been notable the push into electronics of Target, one that has damaged Best Buy. In fact, Target has been named among top stocks picks by Deutsche Bank analyst Bill Dreher.
On the other hand, heavy discounters such as Target, Ross Stores – which target low income groups – might struggle this year if gasoline prices keep rising.
Ross and TJX Cos Inc, parent of the T.J. Maxx and Marshalls chains, sell brand-name merchandise, much of it excess inventory returned from department stores, at steep discounts. In December 2009 TJX was a standout with a 14 percent increase in same-store sales. For December 2010, analysts predict a 2.8 percent decrease.
Teen retailers passed also through a big test in December. After a low November month, Aeropostale hired a strategic advisor to fend off any unwanted advances by buyout firms.
Analysts expect Abercrombie & Fitch to report a same-store sales increase of 9.3 percent, aided by higher prices and more modest promotions than its peers.
In contrast, Aeropostale and American Eagle Outfitters slashed prices on many items throughout the holiday season and are expected to report modest same-store sales declines for December.
