After struggling through a disappointing holiday season, retailers were heartened by a surge in business last week, and a busy shopping day after Christmas, creating more hope that they would meet their modest sales goals.
Wal-Mart Stores Inc. (WMT) , which had faced tepid sales earlier in the season, said early Monday that December sales would come at the midpoint of its December forecast. It added that sales on the Sunday after Christmas were above expectations.
"It came down to the wire, and last week was particularly strong," said Michael P. Niemira, chief economist at the International Council of Shopping Centers (search). But he added he believes the season is still winding up as unimpressive.
"Even if it comes in where we expect, it is still a modest performance, but it is still better than what we had feared two or three weeks ago," he said.
Niemira said he is now more confident that the International Council of Shopping Centers-UBS sales tally for the combined November and December period will be up anywhere from 2.5 percent to 3 percent. He had originally projected that sales for the period would be up anywhere from 3 percent to 4 percent.
The estimate is based on sales at stores opened at least a year, known as same-store sales. Same-store sales are considered the best indicator of a retailer's health
Still, with gift cards increasingly popular, many merchants are relying more on the week after Christmas, hoping that consumers will spend them immediately. Gift cards are recorded as sales only when they are redeemed.
"The holiday season will be told on how many gift cards get redeemed in the week after Christmas," versus how many will be redeemed in January and February, said Ellen Tolley, a spokeswoman for the National Retail Federation (search), which estimated $17.24 billion worth — or roughly about 8 percent of holiday sales — will be sold in gift cards this season.
The industry association is sticking with its forecast of a 4.5 percent gain in total sales for November and December. That excludes restaurant and auto sales.
Other bright spots this season have been online shopping, with sales beating projections, and luxury stores, which have continued with robust sales.
Online holiday sales are now likely to increase 28 percent, beating its original projections of 23 percent to 26 percent, according to comScore Networks Inc. (search), an Internet research firm.
There were plenty of people at the nation's malls and stores on Sunday, looking for post-Christmas bargains.
About 400 people endured the cold and snowy roads to shop at Kaufmann's at Polaris Fashion Place in Columbus, Ohio.
The early bargain-hunters were treated to 50 to 60 percent off everything from coats to shoes to gold jewelry. Many also came in the door with a newspaper coupon offering $10 off if they spent more than $25.
Among the crowds were Tomi and Ira Campbell of Columbus, who arrived at Kaufmann's at about 6:30 a.m., with their 3-year-old son, and an ad with a circled listing for cashmere sweaters discounted to $29.99.
"You can't beat that. I've watched the cashmere sweaters for months," Tomi Campbell said. "I got two cashmeres for less than the price of one."
At Phipps Plaza in Atlanta, homemaker Katie Hercik, 57, said she had already completed her holiday shopping and was at the mall to pick out some things for herself, including shirts and a purse. She stopped in Parisian, which was offering scratch-off cards that included a chance to win up to an additional 50 percent off on some items or a new Mercedes.
"We didn't win the car, but we got 25 percent more off," Hercik said.
The mid-to low-price stores — whose customers are more vulnerable to the economy's woes and had pushed hard with discounts — further sweetened the deals on the day after Christmas, which was the third busiest day of the holiday shopping season last year.
Earlier in the season, Wal-Mart had to step up discounting as it saw its customers pulling back.
On Monday, Wal-Mart reported strength in both food and general merchandise sales for the week ended Friday. Sales of gift cards were up significantly over last year, it said.
It now expects same-store sales for December to be at the middle of its 1 to 3 percent range.
Tim Lyons, a spokesman at J.C. Penney Co. Inc. (JCP), said Sunday that last week was about "where we expected." The Midwest storms delayed sales until the end of the week, which saw a pickup in such items as coats and gloves.
"Overall, we are comfortable with where we are," said Lyons, who is still sticking to the company's November and December forecast for same-store sales gains to be up low single digits.
Lisa Gibbons, a Sears spokeswoman said that traffic the day after Christmas was about level with a year ago, and consumers were buying apparel.
Karen MacDonald, a spokeswoman at Taubman Centers Inc., which owns or operates 22 malls across the country, said that stores are tracking on average anywhere from low to mid single digits sales gains, from a year ago, based on a spot check of malls. But luxury merchants are showing more robust gains, she said.
The full picture for the holiday shopping season won't be known until Jan. 6, when the nation's retailers are slated to report their December sales figures.
According to the International Council of Shopping Centers, the seven-day period ended Dec. 27 accounted for 20.6 percent of holiday sales in 2003, up from 19.6 percent in 2002. The seven-day period ended Jan. 3 accounted for 14.1 percent in 2003, up from 12.8 percent in 2002.