California Apparel News

Consumers waited until the last minute to shop for holiday gifts. The surge of consumer traffic created a 1 percent sales increase for the final week of December over the previous week, ending Dec. 21, according to the International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index. The index was released on Dec. 31.

Statistically, the holiday season ended on a positive note. The Weekly Chain Store Index also noted that retail sales increased 3 percent during the last week of 2013 compared with the same week in 2012. The Consumer Confidence Index rebounded after declines in October and November, said Lynn Franco, director of economic indicators at The Conference Board, a prominent New York–based research group. In a Dec. 31 statement, she said consumers are feeling more confident about the economy because the labor market and economic conditions have showed signs of improvement.

But it didn’t feel like Christmas to many retailers. While official results for holiday business will be released later in January, anecdotal interviews with many retailers gave a mixed view of the season’s business.

Jim Jahant, president of the Rodeo Drive Committee Merchants Association and general manager of Brooks Brothers on Rodeo Drive in Beverly Hills, Calif., forecast that his sales will be fine. “We’re seeing an increase over last year,” he said. “But it is minimal. We’re used to double-digit increases.”

Sales picked up after Christmas, Jahant said. People were attracted to Brooks Brothers’ promotion of 50 percent off on some items, which started the day after Christmas and ended Jan. 3. Tourism from the Rose Bowl game, which took place on New Year’s Day, brought extra crowds in to Los Angeles, he said.

Gila Leibovitch, who runs boutiques in Laguna Beach, Calif., and at the Beverly Center in Los Angeles under the nameplates of Vault and Premier, said that the season started off with a bang on Black Friday. “However, it completely died after that,” she said. People only started opening their wallets after

Dec. 20. Many were attracted by her shops’ big discounts of 20 percent to 30 percent.

“We were busy for the four days leading up to the 24th, but it wasn’t enough to compensate for all of the extra preparation we made,” she said.

Alan Hall owns two boutiques in beach neighborhoods in San Diego and Laguna Beach, Calif. While summer is the most important season for his shops, Eden and Muse, Christmas also is significant. “Warm weather made it difficult to sell jackets and coats,” he said. “We had higher average sale receipt totals per customer but less walk-in traffic.”

The crucial holiday sales season was not forecast to be robust. On Oct. 3, the National Retail Federation, a leading trade group, predicted that sales would “marginally increase 3.9 percent to $602.1 billion” compared with the 2012 holiday. When NRF released that forecast, economists and businesses were anxious over the shutdown of the federal government that took place Oct. 1–16.

After federal government business resumed, holiday forecasts didn’t improve much. Boston-area market researcher Ken Perkins of Retail Metrics predicted that his group’s December Same-Store Sales Index would only rise 2.8 percent. The wan performance was puzzling when juxtaposed against a surging stock market in December and steady increases of housing prices, Perkins said. “What gives? Why aren’t sales stronger?” Perkins asked in a Dec. 24 research note.

In a recent interview, Kimberly Ritter Martinez, an economist with the Los Angeles County Economic Development Corp., said consumers started the holiday season with money, but they were hesitant to spend because the economic outlook for much of 2013 was bleak.

In a Dec. 18 research note, Wall Street analyst Adrienne Tennant of Janney Capital Markets also said the season was weakened because there was less time to shop—26 days, compared with 32 days in the 2012 holiday season.

Many retailers used aggressive promotions this season, which ranged from 20 percent to 60 percent off. The core promotions were 40 percent to 50 percent off. While promotions drove traffic, Tennant said that strategy of deep discounts will hurt business. “We note that most retailers have already cited severe pressure on margins due to the aggressive promotional cadence thus far in (fourth quarter of 2013) and have lowered 4Q13 (earnings per share) guidance accordingly,” she wrote.