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Nation & World

Weak holiday sales at department stores catch many off guard

NEW YORK (AP) – Unemployment hasn’t been so low in years, wages are rising, consumer confidence is high and gasoline is cheap, all creating high expectations for department stores this holiday season.

So when Macy’s and Kohl’s reported lackluster holiday sales on Thursday, investors were taken aback, sending retail stocks into a tailspin and calling into question whether such mall-based chains can compete in a changing landscape where shoppers are shifting more of their spending online.

Kohl’s has a Sterling location at 3220 E. Lynn Blvd.

Macy’s saw only a slight increase of 1.1 percent in sales during November-December at stores opened at least year.

And while sales were strong during Black Friday and Cyber Monday, the company said sales fell off noticeably until the week of Christmas.

Meanwhile, Kohl’s reported a small sales growth that showed a dramatic slowdown from a year ago.

Comparable sales rose 1.2 percent, versus 6.9 percent in the previous year.

Adding to the uncertainty is that investors will not be getting December’s monthly retail sales data next week from the Commerce Department if the government shutdown is still in effect, as most observers expect.

Saunders said investors are also worried that a recovery among traditional stores like Macy’s is losing momentum, raising concerns that they might have to ramp up investments even more to increase sales.

Analysts say factors like a shift to online spending and consumer preferences for experiences like spas and restaurants have hurt impulse spending that likely put a dent in December’s figures for Macy’s and Kohl’s.

Online sellers are relentlessly growing their share of retail sales.

In November, e-commerce and catalog sales jumped 10.8 percent from a year earlier, according to Commerce Department data, more than double the overall sales increase of 4.2 percent. Department store sales slipped 0.2 percent during the same period.

And Marshal Cohen, chief industry advisor at NPD Group, estimates that as much as 40 percent of shoppers bought experiential gifts this holiday season, up from 25 percent just a few years ago.

Target, on the other hand, bucked the trend by posting strong online growth in November and December. Merchandise ordered online and picked up at stores surged 60 percent.

Those sales are key to Target’s campaign to hold online retailers like Amazon at bay, particularly during the competitive holiday season, because shoppers can dodge shipping fees.

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