FINANCE

Strong Sales Uptick in Christmas Week Recap

BY CSA STAFF

New York City In a spot of good news for the nation’s beleaguered retailers, retail sales rose a strong 21.2% for Christmas week (Dec. 21 to Dec. 27) compared to the same period in 2007, according to ShopperTrak’s retail sales estimate. Total U.S. foot traffic, however, for the week fell 4.9% compared to last week, ShopperTrak reported.

The downturn in year-over-year traffic was slight when compared to the dramatic traffic declines retailers have experienced so far this season, the report said. On a week-over-week level, shopper traffic showed a significant increase as the 2008 calendar shift allowed more of a boost from procrastinating shoppers looking for deeply discounted items and last-minute deals on Monday, Tuesday and Wednesday.

Additionally, Dec. 26, a day ShopperTrak anticipated would be the third best-performing day this season, provided a much-needed traffic lift as consumers took advantage of post-holiday sales and began redeeming gift cards.

The 2008 calendar shift significantly helped year-over-year performance (+21.2%) as more consumers shopped Monday, Tuesday and Wednesday in 2008 as opposed to the days leading into Super Saturday in 2007 (Dec. 20 and Dec. 21). But last week’s strong week-over-week performance highlighted the fact that many consumers were waiting for discounted items and exploded onto the scene just prior to Christmas—and on Dec. 26—to redeem gift cards and search for post-holiday sales, according to ShopperTrak.

“Annually, we see a boost just prior to Christmas from procrastinating shoppers and that trend continued last week despite the various economic pressures on the American consumer,” said Bill Martin, co-founder of ShopperTrak. “Both the traffic and sales results of this past week indicate efficient shoppers were focusing their retail visits to stores offering value for their money with deeply discounted items, which we’ve seen throughout the 2008 season.”

Despite Christmas week’s strong performance, Martin indicated ShopperTrak’s holiday-season forecast has been adjusted to a 2.3% retail sales decline with a significant 16.0% traffic decline. Initially, the company predicated a 0.1% retail sales increase with a 9.9% dip in total U.S. foot traffic.

“We expect retail performance will dive over the next couple of weeks as retailers stop offering deeply discounted items and sales, and traffic levels return to seasonal low points following the holidays,” Martin said. “Looking ahead, retailers will most likely need to get creative to avoid the struggles most analysts have predicted in Q1 as the current economy continues to influence consumer behavior and shopping patterns.”

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Consumer Confidence shaken

BY CSA STAFF

The Conference Board’s Consumer Confidence Index in December fell to 38.0, down from 44.7 in November. The new figure is the lowest since 1967, when the business group began tracking the index. A reading of 100 represents 1985 levels of confidence.

Also on the decline were the Present Situation Index, down from 42.3 last month to 29.4 in December; and the Expectations Index fell from 46.2 to 43.8.

“The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008,” said Lynn Franco, director of the Conference Board Consumer Research Center. “The Present Situation Index is now close to levels last seen in the months following the 1990 to 1991 recession, but is not as low as levels reached during the 1981 to 1982 recession. Declines in the Expectations Index appear to be moderating, but this index continues to hover at historical lows. Both sub-indexes bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom. In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half.”

Consumers’ short-term outlook was only moderately more pessimistic. Those anticipating business conditions to worsen over the next six months increased to 32.8% from 28.3%, while those expecting conditions to improve rose to 13.4% from 11.5%.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS.

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American Greetings to acquire Recycled Paper Greetings

BY CSA STAFF

CLEVELAND American Greetings announced it has reached an agreement to acquire Recycled Paper Greetings, a Chicago-based creator of humorous greeting cards with annual net sales of approximately $80 million.

Recycled Paper’s humor cards are distributed primarily through mass retail partners, drug stores and specialty retail stores. The transaction is subject to various closing conditions including a Chapter 11 reorganization process being successfully completed for Recycled Paper and other closing conditions.

American Greetings plans to continue to use the Recycled Paper Greetings name.

 

CEO Zev Weiss said, “The acquisition of Recycled Paper Greetings will be an excellent addition to our current product offering. This transaction will give American Greetings an enlarged product design capability and a compelling product offering that is expected to delight consumers and enhance productivity for our retail partners.”

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