Happy Holidays? Depends If You're a Winner or Loser

4/6/2010
The holiday season is the most critical period and busiest time of year for retailers. It is a make or break time for national retailers since the period from November 1 through December 31 typically accounts for 40 to 70 percent of a merchant's annual sales.

Retailers anxiously anticipated a much-needed sales boost during this past holiday season and for many, post holiday results were gratifying. RIS breaks out the winners and losers that emerged from the past holiday season and examines what successful retailers did right during this critical timeframe and how struggling retailers plan to improve sales in 2010.

Retail holiday sales rose 3.6 percent according to SpendingPulse, a unit of Master-Card Advisors, compared to last year's dismal 2008 holiday season when retail spending plummeted 2.3 percent. The 3.6 gain reported for the period was a welcome turnaround for retailers that feared a continuation of last year's stingy consumer purse strings.

Winners Emerge

Retailers including Tiffany & Co., Bed Bath & Beyond, and Dress Barn posted strong sales during the past holiday season. The following list of winners may come as a surprise considering the poor performance some reported earlier in the year, such as Tiffany & Co. Two retailers on this list, Best Buy and Bed Bath & Beyond, clearly benefited by having their chief rivals (Circuit City and Linen's & Things) drop out of the market due to bankruptcy.

Although the apparel segment struggled all year it showed signs of recovering strength with Dress Barn and Urban Outfitters posting strong financial results.    

  • Best Buy: The electronics giant reported that December revenue for the fiscal month ended January 2, 2010 rose 13 percent to $8.5 billion. "The holiday selling season is critically important to any retailer," said Brian Dunn, CEO, Best Buy. "Our preparations for December begin in January, and this year the stakes were higher than ever, given the tough environment we're all navigating."
  • Coach: The modern accessories retailer reported sales rose 11 percent to $1.07 billion for its second fiscal quarter ended December 26, 2009, compared with $960 million reported in the same period of the prior year. "We were very pleased with the strong sales and earnings growth we generated this holiday, driven in part by a return to positive North American comparable store sales," said Lew Frankfort, chairman and CEO, Coach. "Our performance reflected continued traction of the initiatives we have put in place to adapt to the changed environment. Our customers embraced our innovative and relevant products and collections, while our focus on digital and social media delivered a more engaging brand experience for many consumers."
  • Tiffany & Co.: The luxury jewelry retailer reported holiday sales increased 17 percent to $799.1 million in the two months ended December 31, 2009 due to growth across all three geographic segments in which it operates. "We experienced growth across a wide range of jewelry categories and price points," said Michael J. Kowalski, chairman and CEO, Tiffany & Co. "We continue to focus on Tiffany's ability to expand its profitability and global presence, and expect to provide our financial and store expansion plans for 2010. Long-term, we continue to believe that Tiffany has an excellent opportunity to increase its share of the U.S. and global jewelry market."

Holiday Laggards

Retail chains that struggled during the holiday season also reported store closures, weakened consumer demand for core merchandise, as well as the poor economy as contributing factors in poor sales performance during this critical period. One segment particularly hit hard was book retailers since three leaders in this segment including Barnes & Noble, Books-A-Million, and Borders all posted poor sales results during the holiday season.

  • Barnes & Noble: The book retailer reported holiday sales of $1.1 billion, a 5 percent decrease, for the nine-week holiday period from November 1, 2009 to January 2, 2010 compared to the same period a year ago. "We're pleased we were able to ship all holiday orders for nook in time," said Steve Riggio, CEO, Barnes & Noble. "Demand remains strong and greater than our supply, however, we expect production to catch-up with demand and be fully stocked in our stores in the next few months."
  • Books-A-Million: The book chain announced sales for the nine-week period ended January 2, 2010, totaled $122.1 million compared with $127.9 million during the same period of fiscal 2009, a decrease of 4.5 percent. "Given the challenging comparison to last year's phenomenal success of Stephenie Meyer's Twilight series, we were pleased with our execution during the holiday season,â" said Clyde B. Anderson, chairman, president and CEO, Books-A-Million. "As was the case last year, customers shopped late in the season and proved to be value conscious responding well to our marketing efforts, bargain book department and in-store promotions."
  • Trans World Entertainment: The music and video retailer reported total sales in stores open at least a year fell 8 percent from $287 million to $241 million during the nine-week holiday period ended January 2, 2010. Sales plunged after the company reported it would shutter 137 under performing locations at the end of the holiday season.
  • Zale: The jewelry chain reported sales fell 15.1 percent to $494 million in November and December. On top of the retailer's poor financial performance, the company's board of directors fired three top executives in January, including chief executive Neal Goldberg, following a disappointing holiday sales performance. Also leaving the company are William Acevedo, chief stores officer, and Mary Kwan, chief merchandising officer. The board appointed Zale president Theo Killion to be interim CEO. 
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