Just one week before America’s biggest shopping day, the financial performance of Apple’s retail stores for Black Friday and the entire quarter is unclear–some analysts say sales will be down only slightly, yet will exceed last year’s level. Other analysts are more pessimistic, saying a huge spending downturn across America could leave the stores empty. Based on site visits, the number of visitors to the stores doesn’t seem to have decreased. While there have been scattered reports of fewer assigned hours for part-time Apple store employees, there appear to be no formal employee lay-offs. And unlike past years, there have been no seasonal employee positions posted on Apple’s Web site. Speculation aside, there are plenty of numbers to consider. The U.S. Department of Commerce said October retail sales in the United States fell 3.8 percent, the largest monthly decline since 1992.
The National Retail Federation (NRF) has issued several reports on end-of-year sales, noting that gift card sales will be down, and that October sales took a tumble.
The NRF survey of consumers in early November found that sales using gift cards will decline six percent this holiday season, with average sales per card falling to $147.33, compared to $156.24 in 2007. Men will spend more than woman, the survey found, and those over 45 will spend more than younger Americans. Interestingly, the primary reason for the decline is that consumers consider gift cards too impersonal, followed by shoppers trying to stretch their dollar.
An NRF shopping survey found October sales were down 0.5 percent compared to September, while a U.S. Commerce Department survey found October sales down 3.3 percent compared to last year. The Commerce survey includes the auto industry, while the NRF survey does not.
“Consumers went into hibernation in October while concerns about the economy were at a peak,” said NRF chief economist Rosalind Wells in a press release. “As economic uncertainty went from bad to worse, shoppers pulled back on everything but the basics to weather the storm.”
The NRF said sales at furniture and home furnishing stores were down 13.2 percent year-over-year, while electronics and appliance store sales were down 5.7 percent for the same period. Clothing and clothing accessories store sales fell 3.0 percent.
The NRF said many stores are softening return policies this holiday season “to provide good customer service.” More than half (52%) of loss prevention executives surveyed by the NRF said their policies for returning merchandise will be more lenient than for the rest of the year. Common changes may include retailers extending the amount of time for returns to be made and also being more flexible to customers without a receipt, the NRF said.
Other consumer electronics retailers have been reporting lower sales, especially in October.
PC sales overall are expected to be down one percent during the quarter, according to research firm IDC. Sales were up at least 12 percent in all three of the previous quarters.
Circuit City filed for bankruptcy, and announced 6,800 lay-offs and the closing of 155 of its 721 U.S. stores.
Best Buy warned its investors of lower revenues and profit for the current quarter, saying October sales were down 7 percent compared to 2007. The company forecast revenues would be down five to 15 percent for the holiday quarter compared to last year, and down eight percent for fiscal year 2009. Best Buy has a 21 percent share of the U.S. retail consumer electronics market.
Intel cut its forecast for the quarter, saying revenues would be down about 12 percent because of “significantly weaker demand” in all markets and geographies.
PC maker Lenovo reported sales were down 78 percent for the third quarter compared to last year. The company said sluggish sales and more competition drove down its revenues.
Not all forecasts were gloomy. Piper Jaffray analyst Gene Munster reported that Mac sales during October were up 28 percent compared to the same month of 2007, as estimated by research firm NPD Group. The sales were driven primarily by the new aluminum laptop line-up. Munster forecast that Mac sales would be between 2.5 million and 2.7 million for the quarter, compared to 2.6 million for the just-completed Q4 2008.
Munster said that his firm did a on-site sales count in mid-November at a group of Apple’s stores, and that it “remains healthy,” or up 90 percent year-over-year.
NPD reports that iPod sales were down 20 percent during October. However, Munster forecasts iPod sales of between 18.5 million and 19 million for the quarter, down from 22.1 million in Q4 2008.
So what will retailers be doing to attract shoppers? Several Web sites have already leaked Black Friday sale prices for several retailers that show slashed prices on a few, limited-availability products [BlackFriday.com]. Dell is already offering 20 to 30 percent discounts on selected products purchased on-line.
Like other retailers this season, there are indications that Apple will open at least some stores for nearly 24 hours on Black Friday to gather more sales. Apple hasn’t yet posted its usual Web page of holiday store hours for each location in the chain.
Previous Black Friday specials at Apple stores have offered just $100 or $200 off on computers, and $20 to $40 on iPods. There could also be some bundles, such as a free printer with qualifying computer purchases.
Any further discounts or special deals for Black Friday could provide an indication of how confident Apple’s executives are about sales, and what other discounts they might offer as the holiday shopping season rolls on.
Update: On November 20th Dell reported their latest financial results, which were down slightly.
The holiday quarter has always an important one for electronics retailers, including Apple–up to 30 percent of their sales typicall occur during these three months. With a few early exceptions, Apple’s stores have had record sales in the October to December period.
