FINANCE

Drugstore.com to acquire Salu for $36 million

BY CSA STAFF

Bellevue, Wash. Online health and beauty retailer Drugstore.com announced late Monday it will purchase Salu, the operator of SkinStore.com, for $36 million.

According to Drugstore.com, the deal will make it one of the largest online beauty retailers. Salu’s SkinStore.com Web site sells skin care and beauty products, and the company also runs the spalook.com online store and distributes products in Australia.

The purchase will be funded with $18 million in cash and $18 million in stock, and the deal is expected to close during first quarter 2010.

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FINANCE

Markdowns up after Christmas

BY CSA STAFF

New York City Mall traffic appeared to rise during the weekend after Christmas, but markdowns at apparel retailers were relatively restrained due to lean inventories, analysts said Monday in an Associated Press report.

Roth Capital Markets analyst Elizabeth Pierce said traffic started out slowly on Saturday but picked up throughout the day.

Promotions among clothing retailers at the mall were widespread, she said, but they didn’t “skyrocket the day after Christmas, which we attribute to lean inventory levels,” she noted.

FBR Capital Markets analyst Adrienne Tennant said at some clothing retailers such as American Eagle and Urban Outfitters, “planned promotions and trend-right product served to attract customers without the need for deep discounting” throughout the holiday week and weekend.

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FINANCE

Initial report shows U.S. retail holiday sales up 3.6%

BY CSA STAFF

New York City U.S. retailers posted a better performance during the 2009 holiday shopping season, with sales tracked by MasterCard Advisors’ SpendingPulse up 3.6%. The figures exclude gasoline and automobile sales, and reflect activity that SpendingPulse tracks in the MasterCard payments networks, as well as estimates for other payment forms such as cash and checks.

The increase was fueled by a 15.5% surge in online purchases, as well as a modest recovery in areas such as luxury spending and women’s apparel as tracked by SpendingPulse.

SpendingPulse has been tracking holiday spending figures since 2002, for the period from Nov. 1 until Christmas Eve.

“Last year the economy and consumer spending were in free fall. This year we’re talking about an environment that has stabilized, that has seen a leveling off,” said Kamalesh Rao, director of economic research at Spending Pulse, in a Reuters report.

The spike in online spending stems from greater consumer comfort with e-commerce, as well as from snowstorms that hit the East Coast and the Midwest in the final week before Christmas, stranding many shoppers at home. Online retail sales account for about 5% of overall sales.

But Rao cautioned that the return of retail spending was “tentative” and still far below 2007 levels.

Luxury sales, which include sales at high-end department stores such as Saks and Nordstrom recovered after a bloodbath in 2008, edging up 0.8%.

Jewelry sales shot up 5.6% and gathered steam in the final days before Christmas, Rao said, aided in part by Wall Street bonuses this year and the stock market’s rally in 2009.

“Sales at specialty electronics chains such as Best Buy Co. rose 5.9% in part because of pent-up demand after sales fell sharply in 2008, according to Rao.

Men’s apparel sales rose 3.9%, while women’s clothing sales edged down 0.3%, though sales picked up in December.

Sales at specialty apparel retailers such as Gap stabilized after 2008’s disastrous holiday season, when sales fell by one-fifth. This year, sales edged down 0.4%, but showed signs of life after Black Friday this year, rising 2.3% between the last Friday in November and Dec. 24.

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