Hot start to shopping season, except Wal-Mart

updated 7:36 p.m. ET Nov. 27, 2006

NEW YORK - After what appeared to be a strong start to the 2006 holiday shopping season, the question is whether shoppers will have the same zeal for shopping between now and the end of the season when the discounts may not be as steep.

Stores and malls that opened as early as midnight on Thursday drew bigger-than-expected crowds for discounts on such items as flat-screen TVs and toys, and robust sales for the first day of the season offset slower business as the weekend wore on, according to early reports.

The biggest winners appeared to be electronics chains such as Best Buy Co. Inc. and popular-priced department stores including J.C. Penney Co., which pulled in shoppers with good deals. Yet Wal-Mart Stores Inc., which promised the most aggressive discounting ever, was an exception, announcing Saturday that same-store sales for the month would be weaker than expected. Wal-Mart has struggled for months to appeal to both higher-income shoppers and low-price fans.

“The hysteria has come down a bit, but it was a great start,” said Bill Martin, co-founder of ShopperTrak RCT Corp., which tracks total sales at more than 45,000 mall-based retail outlets. But he said the true measure of the season is whether “retailers can sustain the loyalty and excitement” until the end.

Shoppers were clearly looking for as big a discount as possible.

“I started Friday morning at 5 a.m.,” said Kim Neuharth, shopping at the Jordan Creek Town Center in West Des Moines, Iowa. “At Kohl’s and Target, we got good deals. I bought my stepdaughter a dress for the prom for like 50 bucks. It was originally something like $100 at Younkers. It was on sale and I had a coupon for 20 percent off.”

Martin expects that total retail sales for the first weekend of the season will be higher than last year, boosted by Friday’s better-than-expected business. Total sales rose 6 percent to $8.96 billion that day, compared to a year earlier, according to ShopperTrak. The company planned to report Saturday’s results on Monday.

CNBC VIDEO Online shopping eyed Nov. 27: The Monday after Thanksgiving is one of the busiest days of the holiday season for Internet retailers. CNBC’s Mary Thompson reports on how Web merchants are faring this year. CNBC

Retailers’ strong performance was a direct result of their aggressive discounting and promotions, designed to get consumers to start shopping early. More stores and malls opened at midnight Friday, and Toys “R” Us Inc. and Sears Holdings Corp.’s Sears stores opened at 5 a.m., an hour earlier than in the past.

Jerry Storch, CEO and chairman of Toys “R” Us, said he was pleased with weekend results, noting that sales were strong across the board. In addition to Mattel Inc.’s Fisher-Price’s T.M.X. Elmo, hot toys include Fisher-Price’s Kids Tough Digital Camera, and some of the toy retailer’s exclusives like VTech Holdings Ltd.’s pink Nitro Notebook, a laptop computer.

Gail Lavielle, spokeswoman at Sears Holdings, which also owns Kmart stores, said Sunday the stores were busy through Friday and Saturday. At Sears, flat-screen TVs, digital cameras and Craftsman tools were the hot items. At Kmart, holiday decor including Christmas trees, jewelry and toys were the most popular.

Meanwhile, online shopping was also strong on Friday. ComScore Networks, which tracks Internet spending, reported Sunday that online sales, excluding travel, auctions and corporate purchases, rose 42 percent to $434 million on the day after Thanksgiving, compared to the same day a year ago. ComScore expects online sales of almost $600 million on Monday, known as “Cyber Monday,” the kickoff to the shopping season for e-tailers. That would be a 24 percent increase from the $484 million in sales raked in on Cyber Monday last year.

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