Little Optimism for Year-End Retail27 Dec, 2002 By: Joan Villa
Video retailers appear to have fared better than most this holiday, bucking early reports that this season may be the worst in 30 years.
Retail giant Wal-Mart warned the day after Christmas that December sales would fall short of previous estimates. Two of the final four days leading into Christmas rang up $1 billion in sales, but the last-minute demand was “too late and too little” for Wal-Mart to hit revenue goals, the company reported.
The retailer now expects 2 percent to 3 percent growth in same-store sales for the five-week period ending Jan. 3, rather than the previous range of 3 percent to 5 percent. Wal-Mart reported an 8 percent same-store sales gain for the year-ago period.
Despite aggressive discounting to lure bargain shoppers, analysts say sales momentum did not materialize at many large chains. As a result, Target, Best Buy, Circuit City, Tweeter Home Entertainment and Ultimate Electronics all warned of a slowdown.
Lehman Brothers analyst Alan Rifkin told Reuters news service that poor operating performance may force Best Buy to close as many as 150 mall-based Sam Goody stores in mid-January. The music chain has struggled with declining mall traffic and weak music sales that have been industrywide trends, he said.
Sluggish holiday sales dropped 11 percent from year-ago levels, according to ShopperTrak RCT's National Retail Sales Estimate, which placed retail sales between Thanksgiving and Christmas at $113.1 billion compared to $127.3 billion in 2001. However, the lower sales are not weighted to account for 2002's six fewer shopping days than last year.
In overall online sales, the video category climbed 36 percent to $205 million from Nov. 1 to Dec. 20, reported Web research firm comScore Networks. Overall online sales for the holiday shopping week ended Dec. 20 reached $1.9 billion, 19 percent higher than the same week last year, comScore reported.
Video rentailers may also get a year-end boost from winter storms that left a white Christmas along much of the upper Midwest and East Coast, clearing the way for higher-than-average rentals in the critical last two weeks of the year.
The week before Christmas, Blockbuster lowered revenue projections and same-store sales estimates and its shares plummeted 30 percent to two-year lows. On Dec. 26, the rental chain's stock inched up 8 cents at $12.23 per share. Hollywood Video gained 42 cents to $14.72 and Movie Gallery rose 18 cents to $12.57.