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Hernando Today

Disappointing Holiday Season Doesn't Lift Spirits

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By TONY HOLT

Hernando Today

Published: January 11, 2009

BROOKSVILLE - If retail is Goliath, then the holiday shopping season was the rock from the sling-shot that brought it to its knees.

Wal-Mart blamed its marginal holiday sales on the "difficult economy" and "severe weather" in the northern states.

Sharp discounts to merchandise in late December failed to coax more people to shop at those larger retailers. Even men's clothing chain Jos. A. Bank was giving away two free suits to those who purchased one at regular price.

News of the highest unemployment rate in more than a decade and a half also left people reeling.

The bad news has been piling and the outlook for 2009 isn't rosy - not according to retail forecasters.

"In my 29 years as an analyst, I've never seen anything like it," said Britt Beemer, founder and president of America's Research Group. "Ten years from now, we'll be looking back on this as if it were the 100-year flood. It's been the most fascinating time to study retail trends in my lifetime."

Analysts predicted a 1 percent drop in December 2008 compared to a year earlier, according to Thomson Reuters. That would make it the second-worst month since tracking began in 2000.

The worst month was November 2008, which saw a 2.1 percent decline.

What was the one retail sector that saw improvements in 2008? Dollar stores, Beemer said.

Wal-Mart feels the sting

While Wal-Mart has failed to register its normal powerhouse numbers, it is largely carrying the retail industry during one of its most trying periods. If the chain had been dropped from those November 2008 numbers, then retail would have suffered nearly an 8-percent drop in sales.

Wal-Mart still plans to open additional stores nationwide in 2009, but not nearly as many.

"We're still growing and we've exceeded analysts' expectations," said Wal-Mart spokesman John Simle. "Clearly, we're seeing the effects of the economy. We're finding out that our customers are far more discriminatory in their buying compared to the past."

The store chain predicted its sales numbers would remain flat or perhaps even grow by up to 2 percent in January, Simle said.

While Wal-Mart remains the most popular choice for customers during the ongoing recession, December's disappointing numbers caused it to cut its quarterly earnings forecast. The sales quarter will conclude at the end of January and reports will be released in mid-February.

A closer look at the numbers reveals that grocery and health sales carried the chain in December, while apparel and jewelry slumped. Electronics remained stable.

2009 outlook is dim

Other research firms came up with numbers similar to Thomson Reuters.

Overall, U.S. chain store sales for December 2008 fell by 1.7 percent compared to a year earlier. The November-December holiday sales fell by 2.2 percent, according to the International Council of Shopping Centers.

Furthermore, retail job losses are at their highest levels since 2001.

All things considered, the number of announced store closings nationwide could rise to more than 6,100 for all of 2008 and another 3,100 for the first half of 2009, according to ICSC Research.

In the end, after the total number of actual store closings are factored, approximately 148,000 retail establishments will have been shuttered in 2008. Another 73,000 will close through the first half of 2009.

The 2008 closings are the highest since 2001.

Any suggestion that the current climate falls short of 2001 levels - or even 1992 levels - is laughable, said Beemer. To him, nothing during the last three decades compares.

"This season has been hard to figure out," he said. "It's been like a meltdown ... Overall, the impact of Sept 11, (2001), was miniscule. Christmas of 2001 wasn't really that bad. We were actually up. We weren't down.

"By far, (2008) has been the worst I've seen," Beemer continued. "We're seeing things that have never seen before."

Reporter Tony Holt can be reached at 352-544-5283 or wholt@hernandotoday.com. Reporter Tony Holt can be reached at 352-544-5283 or wholt@hernandotoday.com.

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