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Retailers Start Holiday Sales Blitz 3 Weeks Early

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By ANNE D'INNOCENZIO, The Associated Press

Published: November 1, 2007

NEW YORK - It's not even Thanksgiving, but the nation's retailers, including Wal-Mart and Toys R Us, are jump-starting holiday sales with big discounts and door buster specials starting Friday in what's expected to be a lukewarm Christmas season.

The sales blitz - which comes three weeks earlier than the usual debut the day after Thanksgiving - is great news for consumers, but the new strategy shows the nervousness of merchants. Amid a deepening housing slump and higher food and energy costs, stores see the need to pull in shoppers as early as possible.

'This is clearly a win-win situation for consumers,' said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.

He added, though, 'This isn't good news for stores' profits ... It's just more evidence that this is going to be a highly competitive season. Why would you start to drive traffic this early unless the retailing environment is not expected to be particularly strong?'

With Dec. 25 about eight weeks away, the retail industry is struggling with shoppers' eroding confidence amid higher daily living expenses and problems in credit availability. Also, while Wednesday's move by the Federal Reserve to cut a key interest rate by a quarter-point will make it cheaper to borrow money, economists say it may be too late to help the holiday season.

Wachovia Capital Markets LLC analyst John D. Morris said another problem is that so far there aren't any must-haves this holiday season. A year ago, shoppers were in toy stores looking for the hard-to-find T.M.X. Elmo from Fisher-Price.

'There is nothing out there,' Morris said. 'And so the marketing itself becomes the message.'

While many stores, including KB Toys and Circuit City Stores, say the holiday sales events set for this weekend were planned in advance, Perkins said the early discounting doesn't bode well for the industry's profit picture.

According to Perkins, third-quarter earnings growth is now expected to decline by 3.6 percent, down from a 7 percent gain in July. Fourth-quarter profits so far are slated to be up 5.9 percent, down from 10.9 percent as of July.

Major retailers such as Target Corp. start to report third-quarter results next week.

In recent years, merchants have been pushing the holiday season earlier and earlier, dangling free shipping and discounts. This year, the discounts - coming only a few days after Halloween - resemble the post-Thanksgiving Day blitz, with special door busters and 50 percent discounts as generous as those usually found on Black Friday.

Wal-Mart, which announced price cuts last month, announced Wednesday that it will offer five major holiday specials, including a $348 laptop, starting at 8 a.m. Friday. The other four specials will be kept secret until today when shoppers can see them online, though they can not purchase them. The discounts are being timed to the weekend's launch of Wal-Mart's new Christmas Shops.

On Friday, Toys R Us will launch a two-day sale featuring 100 discounted items. The door busters, which are available from 5 p.m until closing Friday and 8 a.m. to noon Saturday, will include 50 percent price cuts on games, scooters and other items.

Circuit City, the nation's second-largest consumer electronics chain, is launching a sweepstakes marketing initiative, along with special deals on hot electronics.

Meanwhile, KB Toys will offer price cuts on this year's popular new holiday toys as well as last year's items. This year's toys include Mattel's Fisher-Price's Smart Cycle, reduced to $89.99 from $109.99; and Play Along's Hannah Montana Secret Backstage closet, reduced to $24.99 from $37.99.

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