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Holiday estimates leave retailers cautiously optimistic

Friday, Nov. 25, 2005

The last holiday shopping season for the venerable Hecht’s department store chain and declining gasoline prices after the summer’s huge increase are two fresh dynamics affecting area retailers, who are gearing up for the annual sales boost that starts today.

The recent decrease in gasoline prices is causing some optimism in the retail industry. The National Retail Federation, a Washington, D.C., trade organization, reported this week that holiday sales should grow by 6 percent from a year ago, to $439.5 billion. That’s a bit larger than the 5 percent increase the group predicted in September.

‘‘Nearly every retail category has seen strong sales growth in the past few months, indicating that retailers will see positive gains as consumers continue to spend this holiday season,” Rosalind Wells, the federation’s chief economist, said in a statement.

Many retailers are coming off strong sales gains in October, including Hampstead men’s clothier Jos. A. Bank Clothiers, which saw total sales rise 28.5 percent from a year ago to $37 million, while same-store revenue increased by 16 percent. Discounters Target Corp. and Wal-Mart Stores reported same-store sales increases of 6 and 4 percent, respectively, in October.

Not everyone saw revenue go up last month, however. Cincinnati retail giant Federated Department Stores, owner of Macy’s, Bloomingdale’s and other department stores — including Hecht’s, which it bought this year — reported almost a 1 percent slide in same-store sales in October, largely because some Gulf Coast stores remained closed due to hurricanes.

The retail federation’s more optimistic projection would almost match the seasonal growth rate of 6.7 percent that it reported in 2004. Still, there are more pessimistic signs: Target officials said that November same-store sales would come up short of its goal of a 4 percent to 6 percent increase based on sales during the first two weeks of the month, and some consumer trade organizations predict that higher heating bills this winter will keep consumers from spending more on gifts.

In Maryland, retail sales should rise by 4.5 percent, about the same as last year, according to the Maryland Retailers Association. The year has seen solid employment and economic growth in the state, and declining gas prices has helped strengthen consumer confidence, said Thomas S. Saquella, president of the state retail group.

‘‘Their concern about oil and gas prices is diminishing,” Saquella said.

By the numbers 524,350: Number of extra workers hired by U.S. retailers during last year’s holiday season. 20: Percentage of annual sales made by U.S. retailers during the holiday season last year. 9.2: Percentage of holiday sales occurring on Thanksgiving weekend last year. 91: Percentage of U.S. malls extending holiday shopping hours. 4,000: Number of pictures taken with Santa Claus per mall in 2004.

The latest drop in gas prices was definitely encouraging to Larry Barnes, owner of Routzahn’s furniture stores in Frederick and Hagerstown.

‘‘We think that the climate’s been good and that the consumer’s responding,” he said. ‘‘If anything, the setting is positive now, certainly with the easing of gas prices.”

Westfield Montgomery, a Bethesda mall with some 200 stores, is ready for the crowds, said Louise Gordon-Radics, mall marketing director. ‘‘It’s the busiest time of the year for us,” she said.

Westfield will extend shopping hours from 7 a.m. to 10 p.m. on ‘‘Black Friday” today, named for the day when most retailers start to turn a profit. The typical department store amasses 27 percent of its sales during the holiday season, which lasts a little more than a month until Dec. 31, Saquella said. For a jewelry store, it’s even higher, accounting for one-third of its annual sales, he said.

‘‘And most of it comes in the last two weeks,’’ Saquella said. ‘‘Some of these guys live and die in the last two weeks.’’

Several retailers at Westfield Montgomery will open even earlier than 7 a.m. today. Early toy shoppers can enter KB Toys at 5 a.m. for the annual post-Thanksgiving Day sale, its largest sale of the year. Hecht’s, Sears and Guess will open at 6 a.m. The mall and most stores normally begin Fridays at 10 a.m., with Sears usually opening at 9 a.m.

At Lakeforest mall in Gaithersburg, about a dozen stores will open at 5 a.m. with early-bird sales, according to Susan Davis, marketing director. As an extra incentive to attract early shoppers, the mall will drop hundreds of prize-filled balloons at 7 a.m. at the J.C. Penney Court. One balloon will feature a $500 gift card, and other prizes include money baskets from Sandy Spring Bank.

And at Bowie Town Center, some stores will also open earlier than 7 a.m. today, said Kris Winternitz, marketing director. Like most other shopping centers, Bowie has added some new stores in the past year, including a JoS. A. Bank Clothiers.

‘‘We expect at least as good a holiday season as last year,” Winternitz said.

Most retailers continually search for employees, especially during this time of year. Westfield Montgomery conducted a job fair in September to help retailers hire extra clerks and other employees, but it’s difficult to say if it is harder this year to find seasonal workers, Gordon-Radics said. Many stores are offering employees incentive bonuses, as they did last season.

‘‘Everyone needs to increase staff to keep up with the customer demand,” Gordon-Radics said. ‘‘We also take on additional holiday concierges to assist customers with their inquiries, provide free shopping bags and carry their shopping bags to their cars.”

Last holiday seasonfor Hecht’s

This season will likely be the finale for Hecht’s, which has Maryland ties dating to 1857 when a furniture shop in Baltimore opened, followed by its initial department store there in 1885. Federated Department Stores purchased Hecht’s and other stores owned by May Department Stores Co. of St. Louis in an $11 billion deal earlier this year.

Most of the 20 Maryland Hecht’s will be converted to Macy’s next year, Federated officials have said. Plans also call for selling the Hecht’s store at Westfield Wheaton, which opened a Macy’s earlier this year. Officials also plan to close the Macy’s stores in Glen Burnie, Owings Mills and Perry Hall and convert Hecht’s to Macy’s in those cities.

Hecht’s officials and area managers could not be reached for comment. Winternitz and Gordon-Radics said they haven’t heard that the retailer will do anything differently this holiday season beyond its usual sales.

Among the changes in the suburban Maryland retail landscape this year is the revamping of the upscale strip on Wisconsin Avenue in Chevy Chase into an even more chi-chi shopping district.

The 112,000-square-foot Collection at Chevy Chase recently opened a Dior store. In the next week or two, new openings will include Louis Vuitton, Cartier, Ralph Lauren and Jimmy Choo shoes and handbags, according to Debra Lee Gasper, a spokeswoman for owner Chevy Chase Land Co.

Scheduled to open in early 2006 are Gucci, MaxMara and Tiffany & Co. Tiffany will be moving from across Wisconsin Avenues into larger space. Mara USA president Guglielmo Melegari will open his first M-Café and Bar in the MaxMara store. Opening in the spring will be accessory store Bulgari and a Georgette Klinger spa, Gasper said.

An increasingly competitive segment for storefronts is online shopping, which is expected to exceed $18 billion in the United States during the holidays this year, a 25 percent rise from last year, according to Forrester Research Inc. of Cambridge, Mass. Still, online sales are relatively tiny compared with storefronts, with just 7.7 percent of the total retail share, according to Forrester.

Consumer groupsnot as upbeat

Some consumer groups are not as bullish as many retail ones.

A poll released earlier this month by Myvesta, a Rockville nonprofit consumer education organization, found that the average American shopper will spend $747 on holiday gifts in 2005, up 4.3 percent from last year. But that is down 10.5 percent from 2003.

‘‘Consumers aren’t really significantly better off than last year,” said James Tehan, a Myvesta spokesman. ‘‘Personal income and inflation are both up about 4 percent.”

Many shoppers are looking for bargains, he said. ‘‘More are shopping at discount stores to make their dollars go further,” Tehan said.

About 30 percent of shoppers who responded to a survey released this week by Washington nonprofit organizations Consumer Federation of America and the Credit Union National Association said they would spend less than they did in 2004. Only 14 percent said they would spend more.

Another study by the National Retail Federation indicates people will be charging less and paying more with debit cards or cash. Some 28 percent said they will use credit cards, down from 29.5 percent last year. Some 28.5 percent of respondents plan to use cash, up from 26 percent last year.

Books, CDs, DVDs, videos and video games remain gift favorites, with 62.1 percent of those polled planning to purchase at least one as a gift, according to the survey.

Staff Writer Steve Berberich and Katrina Altersitz of Capital News Service contributed to this report.