Retailers expected to increase discounts

updated 7:15 p.m. ET Dec. 19, 2005

NEW YORK - The nation’s retailers are expected to increase discounting in the final days before Christmas after a late-buying binge this past weekend in the stores turned out strong, but not as frenetic as needed.

That’s fueling some concern about the health of profits among some Wall Street analysts, particularly at apparel stores, which have been more aggressive in discounting than a year ago. According to a report from Goldman Sachs Group, Inc., released Monday, 33 fashion retailers, including American Eagle Outfitters Inc., Gap Inc.’s namesake stores and Banana Republic, discounted more heavily this past Saturday compared to the same period a year ago.

“I think there will be some radical markdowns if retailers are going to see good Christmas sales this season,” said C. Britt Beemer, chairman of America’s Research Group, based in Charleston, S.C.

In a report Monday, Goldman Sachs retail analyst Margaret Mager warned of “increased (profit) margin pressure.”

ShopperTrak RCT Corp., which tracks sales at more than 40,000 primarily mall-based stores, reported Monday that sales soared 16.9 percent for the week ended Saturday, compared to the prior week. Sales rose 2.1 percent for the same period a year ago. The surge was a relief after stores struggled with disappointing traffic at the malls since the Thanksgiving shopping weekend, but the buying wasn’t strong enough to make up for the sales shortfall earlier in the season.

The average weekly sales gain for December is up 2.8 percent; ShopperTrak’s holiday forecast calls for a 4.5 percent increase.

“This isn’t champagne popping for sure, but it is getting closer to expectations,” said Bill Martin, co-founder of ShopperTrak. The big question, says Martin: “Will this Saturday be a blockbuster or will it be soft?”

Traditionally, Christmas Eve is not a big shopping day, but since it falls on Saturday, it allows consumers to further delay shopping. It also could have diluted the impact of the last full shopping weekend before Dec. 25.

NBC VIDEO A busy time for package services Dec. 19: The United States Postal Service and private mail carriers such as UPS and FedEx are facing their busiest day of the year. NBC's Tom Costello reports. Today show

John Morris, a retail analyst at Harris Nesbitt, said that it doesn’t surprise him that the past weekend’s shopping wasn’t as robust given this year’s quirky calendar.

“The weekend wasn’t as quite as busy as it could have been,” said Morris, “But I think you are going to see business spread out.”

A late Hanukkah, which starts Dec. 25, is also expected to accentuate last-minute holiday buying.

According to ShopperTrak, four of the 10 top shopping days are still ahead. In fact, the week before Christmas accounted for 19 percent of the holiday season’s sales last year. The week after Christmas made up 10.3 percent of the holiday season’s total business.

Meanwhile, online sales have been strong. According to a poll conducted by Goldman Sachs, Nielsen/NetRatings and Harris Interactive Inc. consumers said they spent $18.6 billion, excluding travel, during the first six weeks of the holiday season ended Dec. 9.

According to the latest monthly analysis from comScore Media Metrix, the number of unique visitors to jewelry and luxury goods sites grew 39 percent, faster than any Internet category in November. Major winners within the category were coach.com, which topped the category with 2.71 million visitors, and zales.com, with 1.72 million visitors.

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