California Apparel News

From clothing racks touting 40 percent to 50 percent off to random, hourly discounts for the timely shopper, a snapshot of the retail holiday season reveals one thing—a bottom-line nightmare.

“Results will be very disappointing, especially in the apparel sector, where we saw nonstop sales,” said Mike Gottlieb, a partner in the retail consumer practice of Ernst & Young.

The release of two reports on Jan. 2 suggests even the promotions couldn’t sustain sales.

Chain-store sales rose 0.9 percent in the week ending Dec. 29, the Bank of Tokyo-Mitsubishi said, after a 2.9 percent rise one week earlier. In a separate report, Instinet’s Redbook Average showed a 3.9 percent drop in sales during the four-week period ending on Dec. 29 compared with the equivalent period in November.

Like most analysts, Gottlieb predicts a flat to 2 percent increase in sales for the season.

That figure pits 2001 as one of the least successful holiday seasons in a decade. According to the U.S. Commerce Department, the worst revenue performance occurred in 1990, when holiday sales were flat.

Analysts say it isn’t all bad news.

“When you consider the government has said that we’ve been in a recession since March, any kind of increase is a positive thing,” said Madison Riley, a principal in the retail merchandising practice at Kurt Salmon Associates. “Another key thing is that merchants are well-positioned to start off the new year given that their inventories are in good shape.”

Along with a tempered mood following the terrorist attacks of Sept. 11, the spending slump also was due to the lack of the “must-have” factor. Unless shoppers were in the market for Microsoft’s Xbox or Nintendo’s GameCube, they felt little incentive to buy much else.

“There was an absence in fashion. There wasn’t anything that had pizzazz to it,” Gottlieb said.

Cool weather was driving sales at Fresno, Calif.-based Gottschalks Inc. during the weekend prior to and the days after the holiday. Both men’s and women’s sweaters were strong sellers as were outerwear, accessories and gloves, said Fred Dentelspacher, Gottschalks’ vice president of marketing.

“We’re optimistic that we’ll come in with a decent December, coming in on plan,” he said.Mervyn’s department store in Southern California’s Glendale Galleria was doing a brisk business in menswear, according to general manager Margaret Kiernan.

“Overall, for the month, we’re up,” Kiernan said. “We could have a small increase in holiday sales compared to last year.”

For malls, there was an extra reliance on new customer activities and promotions. South Coast Plaza in Costa Mesa, Calif., raced out of the seasonal starting gate with a nine-day gift-with-purchase program. Shoppers who spent $500 in one day received a Tiffany crystal bowl.

“It was successful beyond our dreams—we had to reorder three times,” said Debra Gunn Downing, the shopping center’s executive director of marketing.

That promotion, along with dizzying retailer price cuts, led to a 5 percent increase in traffic over the year prior, Downing said. Shoppers took advantage of Giorgio Armani’s 40-percent-off and Bally’s 50-percent-off sales as well as the myriad coupons at Gap, Banana Republic, Salvatore Ferragamo and Macy’s West.

Downing said December “will beat expectations” and she expects to post an increase over last year.

The lines were long to pose with a clean-shaven “Hunky Santa” at the Beverly Center in Los Angeles, according to general manager Laurel Crary.For the most part, though, shoppers weren’t spending fistfuls of cash, she said.

“People weren’t backing off from buying, but they didn’t go overboard either,” Crary said. “Most reaction from retailers is that they’re doing as good as last year. Most business was stronger outside of the apparel sector.”

Crary expects to see an increase between flat and a few percentage points for the holiday season.