Strong for Holiday Season
Online holiday sales, helped by free shipping
offers, are turning out to be robust, according
to several preliminary reports released Monday,
providing a bright spot in an otherwise mediocre
The double-digit percentage increases
at online retailers far outstripped the slim increases
estimated for sales in stores. After a better-than
expected surge after Thanksgiving, sales at stores
were disappointing throughout the season, despite
"Compared to an anemic holiday
season (at stores,) this was a terrific holiday
season for online retailers," said Ken Cassar,
senior analyst at Jupiter Research. But Cassar
warned that given that free shipping was an important
driver of online sales, he is worried about companies'
profits. He added that it will be hard for online
retailers to wean themselves away from free shipping
and handling, and consequently, they may have
to increase prices as an alternative.
"Retailers that want to
offer free shipping will have to make a difficult
choice between increases in sales and in profit
margins." Jupiter Research announced Monday
that e-commerce sales will exceed its original
forecast of $13.1 billion, which would represent
growth of more than 17 percent from the year-ago
period, based on early reports from online retailers.
Now, Jupiter Research anticipates
a 20 percent to 24 percent gain for the holiday
2002 season, which was from Nov. 1 through Dec.
31. It is expected to release final numbers in
March. A separate report from Nielsen/NetRatings,
Goldman Sachs and Harris Interactive said that
online spending jumped more than 24 percent to
$13.7 billion, from Nov. 2 through Dec. 27, up
from $11 billion in the year-ago period. That
was in line with projections for sales increases
in the low 20 percent range.
The company based its data on
surveys with a total of 9,000 online shoppers
during the holiday period. ComScore Networks Inc.,
which captures buying activity from a cross section
of 1.5 million Internet users, said that online
sales were up 20 percent to anywhere from $19.7
billion to $19.8 billion during the Nov. 1 to
Dec. 31 period, according to preliminary reports.
According to BizRate.com's final holiday revenue
tally, which was released late last month, online
sales were up 23 percent to $7.92 billion from
Nov. 25 through Dec. 25, compared with the comparable
year-ago period. The shopping comparison site,
which also tracks consumer spending across 2,000
Web sites, had forecast a 24 percent gain.
All holiday sales figures exclude
the travel category. This holiday season, 140
retailers offered free shipping deals, about 30
percent more than last year, according to BizRate.com.
BizRate.com also found that 39 percent of holiday
online purchases were influenced by free shipping
Michael P. Niemira, vice president of Bank of
Tokyo-Mitsubishi Ltd., expects that sales at stores
open at least a year, known as same-store sales,
will be up only 1.5 percent for the November and
December period. That would be the weakest increase
since the same-store index started tracking the
figures in 1970.
Same-store sales are considered
the best indicator of a retailer's health. The
bulk of brick and mortar retailers will be reporting
their December sales on Thursday.
In the online world, analysts are closely monitoring
Amazon.com, the bellwether of online retailing,
to see whether its aggressive free shipping and
discounting will affect gross profit margins in
the fourth quarter. The online seller of books,
apparel, DVDs and other items has projected net
sales in the period to be between $1.3 billion
and $1.4 billion, a 19 to 28 percent growth from
the year ago period. The company expects a pro
forma operating profit of between $70 million
and $95 million. Amazon.com is slated to report
fourth-quarter results on Jan. 23. Meanwhile,
Bluenile.com, a privately held online jewelry
site, said that it expects fourth-quarter sales
to be up 78 percent, well exceeding its projections
for growth in the 40 percent to 50 percent range.
"This was a breakout year for online jewelry,"
said John Baird, a company spokesman.
Not everyone was pleased with
results. Online company 1-800 Flowers.com said
Monday that it anticipates achieving earnings
of 11 cents per share in its fiscal second quarter,
which includes the holiday period and ended Dec.
29. That's below analysts' projections for a 15
cents per share.
The company also expects to generate sales of
$197 million, below the anticipated $203 million.
However, Jim McCann, the company's chief executive,
said that profit margins improved to 45 percent
from 43 percent in the year-ago period.
McCann acknowledged that 1-800
Flowers should have done more aggressive marketing,
including more advertising, particularly with
its business clients, to increase sales.
"On a relative basis, we did very well, but
we would have liked to have done better,"
Publicly traded retailer Bluefly.com, which sells
discounted designer apparel, expects fourth-quarter
sales to be in line with the more than 20 percent
growth expected, but Pat Barry, chief financial
officer, said that the company's goal of close
to breaking even for the period will be "a
While sales at Bluefly.com in
November and December were strong, revenues were
slow in October, stymied by new technology installed
on its Web site, Barry said.
Source: The Associated Press, Newsbytes