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Deferred Gratification

Aired December 24, 2002 - 11:36   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


LEON HARRIS, CNN ANCHOR: Everyone knows that retailers traditionally slash their prices immediately after Christmas to unload as much inventory by the end of the year, and then boost their bottom line at the same time.
For consumers, that's a great money-saving strategy, to wait until December 26th to buy the big-ticket items. That is if there are any left.

Report analyst Dana Telsey from Bear Stearns joins us from New York now with an outlook on the after-Christmas sales.

Happy holidays to you, Dana.

DANA TELSEY, BEAR STEARNS: Happy holidays to you, too.

HARRIS: Give us the word, what's the outlook look like.

TELSEY: The outlook look like now for Christmas is that it's not a good as Christmas as people expected. Don't forget, there are six fewer days between Thanksgiving and Christmas, and that is causing consumers to wait until the last minute, and creates a lot uncertainty for the retailers.

After Christmas, as you mentioned the bargains will be steep. Many companies and many stores are taking 50 percent off some of the markdown merchandise on Thursday and thereafter.

HARRIS: All right, but with those steep discounts they'll be offering, how much of a profit, how much is that going to help the bottom line.

TELSEY: It definitely will be an impact to the bottom line, but don't forget, you have to move the merchandise. How competitive it is out there, it really is necessary in order to make room for the newly arriving goods. Most retailer's earnings will probably be under pressure, anywhere from 5-10 percent in the fourth quarter.

HARRIS: With the decreased now expectations based upon what we're actually seeing happen on the streets, is this a case of there actually been something afoot amongst the consumers, or just a matter of those analysts not taking into account those six fewer days we have to shop this time around?

TELSEY: I think it's a part of everything, basically. Retailers found it very difficult to plan not knowing how much of the sales would be coming every single day and not knowing that 25 percent of Americans had not finished their shopping as of Sunday. So these last two days are critical.

I think in terms of analysts and their numbers, it's certain modest expectations had been built in. The level of markdowns I think is greater than everyone expected, and I think consumers, overall, know the longer they wait, the deeper the discounts.

HARRIS: So where would be the place to go if you're looking to make that one really smart or big purchase, which one would it be? Last year around, it was all the zero percent financing deals that were being offered. People are used to that right now. If you had to look for one smart and one big deal, where would you go right now?

TELSEY: Go to the department stores, go to FAO Schwartz, that's where some of the good deals are going to be. Consumer electronics retailers also. You can get some of those DVD players very cheap.

HARRIS: OK. Keep that one in mind.

Now, what about for kids? If you want to shop for kids coming up, you say FAO Schwartz. How about for grownups? We already hit FAO Schwartz. What about for grownups. If there's something that's special and you want to get something for a grownup and pick up a really good bargain after December 26th, where would you go.

TELSEY: After December 26th for grownups, if you need a new winter coat, check out the department stores, check out some of the outer wear stores. There's going to be a lot of shearling (ph) coats for sale and also sweaters. You're going to be able to find loads of sweaters, almost any style, any color, any fabric that you want at almost any retailer in the mall.

HARRIS: That's maybe because half of them will be returned for gifts given on the 24th and 25th, but that's a different story.

HARRIS: Reporter: exactly.

TELSEY: Thanks, Dana. Good deal, Dana Townsend from Bear Stearns.

Have a happy holiday, OK?

TELSEY: You, too.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired December 24, 2002 - 11:36   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Everyone knows that retailers traditionally slash their prices immediately after Christmas to unload as much inventory by the end of the year, and then boost their bottom line at the same time.
For consumers, that's a great money-saving strategy, to wait until December 26th to buy the big-ticket items. That is if there are any left.

Report analyst Dana Telsey from Bear Stearns joins us from New York now with an outlook on the after-Christmas sales.

Happy holidays to you, Dana.

DANA TELSEY, BEAR STEARNS: Happy holidays to you, too.

HARRIS: Give us the word, what's the outlook look like.

TELSEY: The outlook look like now for Christmas is that it's not a good as Christmas as people expected. Don't forget, there are six fewer days between Thanksgiving and Christmas, and that is causing consumers to wait until the last minute, and creates a lot uncertainty for the retailers.

After Christmas, as you mentioned the bargains will be steep. Many companies and many stores are taking 50 percent off some of the markdown merchandise on Thursday and thereafter.

HARRIS: All right, but with those steep discounts they'll be offering, how much of a profit, how much is that going to help the bottom line.

TELSEY: It definitely will be an impact to the bottom line, but don't forget, you have to move the merchandise. How competitive it is out there, it really is necessary in order to make room for the newly arriving goods. Most retailer's earnings will probably be under pressure, anywhere from 5-10 percent in the fourth quarter.

HARRIS: With the decreased now expectations based upon what we're actually seeing happen on the streets, is this a case of there actually been something afoot amongst the consumers, or just a matter of those analysts not taking into account those six fewer days we have to shop this time around?

TELSEY: I think it's a part of everything, basically. Retailers found it very difficult to plan not knowing how much of the sales would be coming every single day and not knowing that 25 percent of Americans had not finished their shopping as of Sunday. So these last two days are critical.

I think in terms of analysts and their numbers, it's certain modest expectations had been built in. The level of markdowns I think is greater than everyone expected, and I think consumers, overall, know the longer they wait, the deeper the discounts.

HARRIS: So where would be the place to go if you're looking to make that one really smart or big purchase, which one would it be? Last year around, it was all the zero percent financing deals that were being offered. People are used to that right now. If you had to look for one smart and one big deal, where would you go right now?

TELSEY: Go to the department stores, go to FAO Schwartz, that's where some of the good deals are going to be. Consumer electronics retailers also. You can get some of those DVD players very cheap.

HARRIS: OK. Keep that one in mind.

Now, what about for kids? If you want to shop for kids coming up, you say FAO Schwartz. How about for grownups? We already hit FAO Schwartz. What about for grownups. If there's something that's special and you want to get something for a grownup and pick up a really good bargain after December 26th, where would you go.

TELSEY: After December 26th for grownups, if you need a new winter coat, check out the department stores, check out some of the outer wear stores. There's going to be a lot of shearling (ph) coats for sale and also sweaters. You're going to be able to find loads of sweaters, almost any style, any color, any fabric that you want at almost any retailer in the mall.

HARRIS: That's maybe because half of them will be returned for gifts given on the 24th and 25th, but that's a different story.

HARRIS: Reporter: exactly.

TELSEY: Thanks, Dana. Good deal, Dana Townsend from Bear Stearns.

Have a happy holiday, OK?

TELSEY: You, too.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com