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Sales at Limited Brands, which operates the Victoria’s Secret lingerie chain, climbed 7 percent in November, beating Thomson Reuters’ projection of 4.4 percent. Macy’s posted a 4.8 percent increase in same-store sales, topping the 4.1 percent estimate.
Retailers got a bigger sales lift from shoppers taking advantage of holiday discounts than had been expected. From Thursday through Sunday, U.S. consumers spent a record $52.4 billion, according to the National Retail Federation, up 16% compared to last year. And that’s without accounting for Cyber Monday.
“Black Friday through Cyber Monday has become an increasingly important part of the holiday shopping season, and I am pleased with our results for the weekend,” said Limited Brands CEO Leslie Wexner in an e-mailed statement.
The holiday quarter is key to the industry and could generate more than half of annual profits for electronics, jewelry and other retailers. And Thanksgiving weekend is only the beginning of holiday shopping, with December representing roughly 40% of the entire quarter’s sales.
However, the strong Black Friday sales are unlikely to spur momentum throughout the holiday season, said Marshal Cohen, chief industry analyst at NPD Group in Port Washington, New York.
“Just because the deals are good doesn’t mean that consumers have a bigger paycheck or more money in the bank to spend,” Cohen said in a telephone interview before today’s results.
Ultimately, the strong turnout on Black Friday, the busiest shopping day of the year, showed a big rift between retailers. While some retailers were encouraged by shoppers getting a start on their holiday shopping, others did not experience the swell of buying they had hoped.
“The consumer has become insanely focused on promotions,” said David Bassuk, head of the global retail practice at AlixPartners. “The consumer is willing to spend money, that’s the good news. But consumers needs to be convinced.”
Gap’s same-store sales fell 5 percent, deeper than the expected 4.3 percent decline, as the company’s discounts were not as aggressive as many of their competitors.
At Target, though people who bought did spend more, on average, fewer customers turned out and made purchases than expected. Toys, music, and movies were among the worst-performing categories.
Of the 22 chains tracked by Thomson Reuters, so far 13 have reported November sales, 8 of them beating expectations.
Retailers must now focus on making the right moves to see profitable gains for the rest of the holiday season — a difficult task given that many industry analysts expect shoppers will hold back after their weekend binge.
“Clearly, retailers bent over backwards to juice sales up for the holiday weekend,” using tactics such as earlier door-buster sales, said Kurt Salmon retail strategist John Long. The deep discounts could put retailers’ margins under pressure.
Furthermore, Thanksgiving weekend sales levels may not be sustainable over the rest of the holiday season.
Here’s a look at all of the retailers reporting November same-store sales so far (actual sales vs. Thomson Reuters estimate):
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