The company’s CEO summed up the Thanksgiving shopping experience very succinctly:
Thanksgiving week sales exceeded last year’s, however results did not meet our expectations. We had been planning for a promotional holiday season but we now expect the intensity of those promotions to reach heightened levels and we are updating our full year guidance accordingly.
That “intensity” of promotions cannot have hit just Express stores. After markets closed last night, J.C. Penney Co. Inc. (NYSE: JCP) reported that November same-store sales rose 10.1% on the strength of last weekend’s sales. That is good for J.C. Penney, but did the company make any money? At least one report we saw noted that virtually every item of merchandise in J.C. Penney’s was marked down, some by as much as 70%. The only reason the stores could not sell the merchandise at that level of discount is because the cash registers were not working.
We noted earlier this morning that this year’s holiday shopping season has just gotten started and retailers have got to be worried that intense promotional pricing and big sales estimates have not just pulled business forward and out of the remaining three weeks of the season. If that is what happened, then even more intense promotional pricing is likely to be the only way to draw shoppers back to the stores.
Online sales posted big gains as well last week, but sites like Amazon.com Inc. (NASDAQ: AMZN) also have to be concerned about attracting customers for the rest of the season. Amazon, perhaps uniquely, focuses more on sales than on margins, a luxury that brick-and-mortar retailers do not have. And given Amazon’s aggressive pricing last week and on into this week, even its online sales could fail to materialize over the next few weeks.
It ain’t over ’til its over, but at this point it looks like retailers will do okay as measured by same-store sales and revenues. Profits, though, are far more problematic.
Express Inc.’s shares were down about 18% in early trading Wednesday, at $20.21 in a 52-week range of $13.70 to $25.05.
J.C. Penney shares were down about 2.7%, at $9.84 in a 52-week range of $6.24 to $23.10.
Amazon shares were about 0.7% higher, at $387.25 in a 52-week range of $242.75 to $399.00.
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