Ho No No: Christmas Was Kind Of A Downer, After All

After all that fussing about the weather (too warm), the discounts on plasma TVs (too deep) and the shoppers (too few), major retailers made it official yesterday: Christmas 2006 is going into the books as kind of a dud.

Part of the problem was the tremendous surge in gift-card spending, says Ellen Davis, senior director for the National Retail Federation. Gift card purchases came in at $24.8 billion this holiday season, up $6 billion over last year.

Gift cards, which are not booked as sales until they are redeemed for merchandise, "are a bit of catch 22," Davis said. "They do bring people into the store, and in many cases, it may be people that normally wouldn't shop there."

But often, those sales come too late to buoy December results. In a survey of consumers last year, for example, the NRF found that by Jan. 19, only 38.1% of gift cards had been redeemed.

Overall, results can best be described as ho-hum rather than bah-humbug, but there were some notable disasters: December same-store sales at Gap fell 9%, and at Gap's Old Navy division, sales dropped 10%. Home-furnishings retailer Pier 1 Imports saw same-store sales fall 10.7%.



Big discounters did OK: Same-store sales at Wal-Mart in December gained 1.3%, while Target posted a 4.1% increase in December same-store sales.

Department stores also fell into the so-so category. At Federated Department Stores, same-store sales increased 4.4%, at Kohl's, sales gained 3%, and at J.C. Penney Co., 2.6%. The big winners were luxury retailers, including Saks (with same-store sales up 11.1%), Nordstrom (up 9%), and Neiman Marcus, including Bergdorf-Goodman (up 7.3%.)

Teen chain American Eagle Outfitters Inc. saw its December sales shoot up 13%. And even given the shortages of Sony's Playstation 3 and Nintendo's Wii, GameStop said its holiday same-store sales gained 23.9%. Overall, an index of about 60 retailers compiled by Retail Forward inched up 3.2% from the prior month, but was down from a year ago. (In December 2005, the composite index gained 3.6%.)

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