Retail sales shrink on a gloomy Christmas Holiday- BKS, M, & ANN

Christmas wasn’t all that merry for the average American retailer who expect to score as much as 50% of annual revenues during the holiday shopping season ahead of the new year’s celebrations.

Kim Forrest, an equity analyst at Fort Pitt Capital Group opines investors would have to carefully watch out for the margins “if the top line didn’t meet their expectations”.

Even the declining unemployment and the upsurge in the real estate and construction sectors have not been enough to pull sales up amid the roller coaster stride of a Superstorm and the unrest entailing the budget negotiation. 17% of shoppers restricted spending amid the fears of a regressive budget this year.

Sales recovered around the Black Friday weekend but there was a lull early in December.

Figures from The National Retail Federation showed a 4.1% expected growth rate for this year compared to 5.6% growth in 2011. MasterCard Advisors SpendingPulse also reported  only a 0.7% increase in holiday sales since October 28, compared to an only 2% increase during the last year. At target New York store most dollars were spent on groceries, toys and gift items.

Chief economist for the International Council of Shopping Centers, Michael Niemira said the sector performed “very uneven” which trend “continued into the holiday season,”. This could be the worst weekend since 2008.

The market’s response was acute; The S&P retail index fell as low as 1.83% yesterday.

Soft sales mean a surplus inventory which pushed retailers to hash prices further.

Notable brands like Ann Inc (NYSE:ANN) and Barnes & Noble Inc. (NYSE:BKS) offered as much as 50% off; Macy’s Inc. (NYSE:M) owned Bloomingdales boasted discounts as high as up to 75%.

Marshall Cohen, The NPD Group’s chief analyst said retailers “chasing inventory management” are ready to go as far as 75%-80% below the tag price. Customer’s can’t go wrong with that kind of offer would they?

Online sales are the only bright side to the gloomy outlook. IBM Digital Analytics Benchmark which tracks more than a million transactions (per day) with 500 US retailers, announced a 2.4% increase eclipsing the 16.4% growth last year. Retailers having fiscal year end of January, still have enough time to catch up as sales rebound after Christmas.

The shares of Barnes and Noble Inc. (NYSE:BKS) were down 0.53% to close at $14.49. Shares of Macy’s Inc. (NYSE:M) were down 1.04% to close at $37.03. Shares of Ann Inc (NYSE:ANN) were down 5.12% to close at $32.06.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ( or his Google+ page (