December 14, 2012

Holiday Shopping Saga Isn’t Over Yet

by Alpha Now Research Team

The annual ritual known as holiday shopping still has ten days – and two crucial weekends – left before Christmas, the biggest gift-giving day of the year, arrives, and with 28% of Reuters/Ipsos poll respondents confessing that they haven’t yet begun their holiday shopping, retailers could see a healthy gain in same-store sales this month.

There may be less than to weeks to go before Christmas, and Hanukkah is already underway, but the latest Reuters/Ipsos poll suggests that this year – like many others – a fraction of shoppers have completed their holiday shopping. Procrastination, it seems, remains the rule rather than the exception, with 18% claiming they have already finished but another 28% admitting that they still haven’t even begun the task.

That sets the stage for a boost in same-store sales for December for many retailers, as shoppers dash out to complete their annual task on the final two weekends of the year. Shoppers earned an extra two days in which to shop between Thanksgiving and Christmas this year, and the weekend of December 22nd and 23rd will be particularly crucial for retail sales this year, falling so close to Christmas on the following Tuesday.

In spite of the fact that so much is still uncertain, with so much shopping and spending likely to be packed into so few days, analysts are already projecting that same-store sales for this month will top those of December 2011. The Thomson Reuters Same Store Sales Index (excluding Drug Stores) for December 2012 now calls for a 4.3% increase over year-ago levels, even though it already was dealing with a robust comparison from last year’s 4.2% gain in SSS for the month. That kind of 3% forecast growth in same-store sales suggests that consumer spending is ending the year at a healthy rate.

The Reuters/Ipsos survey of holiday shoppers suggests that most set out with the intention of spending less than they did a year ago. But virtuous intentions don’t always last, especially when shoppers end up inside the stores and spot the bargains or special offers that retailers offer up. Historically, shoppers vow to spend less each holiday season, but end up spending more.

The poll also suggests that shoppers plan to visit a variety of retailers in quest of gifts, with department stores and discounters leading the way. (According to the poll, 43% expected to check in at the former, and 30% of respondents intended to complete some of their shopping at the latter.) Analysts expect discounters to report a 5% gain in SSS for December, significantly better than the 4.3% gain in SSS reported in December 2011. Analysts now also are calling for a small gain in the same-store sales of Macy’s (M.N), Nordstrom (JWN.N); they project SSS will grow 4.5% for the month, after an already-healthy 4.2% advance in December of last year.

On the flip side, a mere 1% of shoppers expect to make more purchases at an apparel store, and this trend is showing up in SSS forecasts already, only halfway through the month. Analysts now expect the Apparel group to see a gain in SSS of only 2.3%, down from growth of 4% in December of last year.

For most of the shoppers surveyed, even the seasonal crowds in stores and the growing options available online don’t stop them from preferring to do much of their retail shopping in person. Nonetheless, a growing number are choosing to add some online shopping to their mix, with the number one destination reported as being Amazon (AMZN.O). That online retail giant is expected to report $22 billion in revenue for the current quarter, up 28% from year-ago levels. (See Exhibit 2, below.) Analysts are projecting the company will report a profit of 29 cents for the quarter, although one analyst who has won a high rating from StarMine for accuracy in predicting earnings, believes that estimate may be too low; that analyst’s expectation is that the company will post a profit of 41 cents per share for the quarter. One factor at work is the company’s new array of Kindle e-readers and tablets: analyst believe Amazon has increased its marketing for the devices, a smart move this holiday season that could pay off, particularly in the shape of higher sales.

• For more on analysts’ changing views of retail Sales, and the Ipsos Poll results, please click here

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