CHICAGO – U.S. retailers are gearing up for a big holiday shopping weekend in a much merrier mood than a year ago, thanks to a rebounding U.S. economy that is likely to drive better sales, particularly of high-end goods.
Luxury chains including Tiffany & Co. Inc. (TIF), Nordstrom Inc. (JWN) and Sharper Image Corp. (SHRP) have seen big sales improvements over last year, and analysts expect that to continue through the vital holiday season.
But with some analysts looking for a blockbuster 5 percent to 7 percent holiday sales increase over 2002, big chains have tried to cool expectations for a bumper holiday.
The Consumer Federation of America (search) and the Credit Union National Association added cautious comments on Tuesday with a survey showing that one-third of those polled expect to spend less during the holidays than they did in 2002.
Big-box retailers such as Wal-Mart, Target and Best Buy Co. Inc. (BBY) will still attract the lion's share of shoppers, but with price battles breaking out over toys, consumer electronics and household appliances, profits may not keep up with sales.
Black Friday -- the day after Thanksgiving and traditionally one of the biggest shopping days of the year -- will bring the usual array of markdowns, early-bird specials, pictures with Santa and traffic jams.
The Friday after Thanksgiving used to be the biggest shopping day of the year, but for at least the last six years, the top sales day has been the Saturday before Christmas. In 2002, Black Friday was the fourth-biggest shopping day.
Last year, Thanksgiving weekend sales were strong, with Wal-Mart recording a staggering $1.4 billion in sales on that Friday alone.
But demand dwindled after that as a stagnant economy and nagging worries about war in Iraq (search) crushed consumer sentiment. The November-December holiday shopping season generated the smallest sales gain in more than 30 years, according to the Bank of Tokyo-Mitsubishi (search), which tracks shopping trends.
This year, BTM retail analyst Michael Niemira said holiday sales were already tracking ahead of last year. He expects November sales at U.S. stores open at least a year to show a 4 percent increase from last year, helped by an improved U.S. economy and forecasts calling for shopper-friendly dry weather across much of the United States on Friday.
Discounters and department stores alike have stocked up on higher-end goods such as plasma televisions and diamonds, hoping that recent signs of stronger consumer spending will carry through the holiday season.
Sears, Roebuck and Co. (S), the largest U.S. department store chain, said it doubled the number of plasma and LCD televisions it carries, with prices about half what they were last year.
Gift cards are also expected to be big this holiday season, which can cause problems for retailers because they can't count the revenues until the cards are redeemed, usually in late December or early January.
Richard Hastings, retail analyst with Bernard Sands, said gift cards may also keep customers out of stores in November because many people buy gift cards at the last minute.
With Target and Wal-Mart slashing prices on toys in hopes of drawing in customers, profits may be hurt. Target told analysts earlier this month that it probably would not meet their forecasts for fourth-quarter earnings.
"In the world of Wal-Mart, toys are almost free," said Kurt Barnard, head of consulting firm Retail Forecasting Group.