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CNN Sunday Morning

Interview With Vera Gibbons

Aired December 16, 2001 - 08:51   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.
KYRA PHILLIPS, CNN ANCHOR: Last-minute shoppers could be the winners this time of year as retailers break for a potentially dismal holiday season. That could mean some pretty good discounts for you though.

Joining us this morning with a few tips, Vera Gibbons from "SmartMoney" magazine.

Hi Vera.

VERA GIBBONS, "SMARTMONEY" MAGAZINE: Hi Kyra.

PHILLIPS: All right. So overall so far, how does November look? Or...

GIBBONS: Well ...

PHILLIPS: How did it fare, I should say.

GIBBONS: Doesn't look so good. Sales were down by about 4 percent, which is the worst decline -- the biggest decline we've had since 1990. A lot of these stores just were unable to meet their sales target. Stores like May Department Stores, J.C. Penney, Abercrombie & Fitch, and of course, The Gap.

Same-store sales with The Gap were down 25 percent in November, a more significant decline than what the analysts had predicted. They thought sales were going to be down about 17 percent.

Making matters worse, auto sales down about 12 percent in November. Auto sales had done really well in October and were largely responsible for the growth that we did see in October. Now it seems, to some degree, that the novelty of 0 percent financing has, in fact, worn off.

So it wasn't a good month in November.

PHILLIPS: So retail -- have retailers sort of given up, then, on profits and just -- are they focusing now on discounts and good deals?

GIBBONS: Well, there are discounts to be had on just about everything from leather jackets, to sweaters, to DVD players. These stores will report their fourth quarter earnings in February, and it doesn't look promising for a lot of stores. Specifically for the specialty stores, the high-end department stores.

But some of the stores like Wal-Mart, for example, Target, Kohl's, Lowe's, Home Depot, those guys are going to do just fine. It's the other stores that don't have a clear idea of what the buyers want, those are the guys who are in trouble. Stores like K-Mart, for example, stores like Sears. They're going to be in for a little more difficult times, I'm afraid.

PHILLIPS: Could they be going out of business? Could it get that bad?

GIBBONS: It could. We've had already 33 bankruptcies by far. You know, in the last recession we had 25 or 26 bankruptcies. And I would imagine that after all is said and done, we will see some consolidation and we will ultimately see a couple of stores go under.

PHILLIPS: What about after-Christmas sales? Could that give folks a boost?

GIBBONS: It's definitely going to give the folks a boost. There are going to be additional incentives to buy, additional rebates, stuff is going to be marked off 50, 60, 70 percent off. So there are deals to be had just about everywhere. But all of these deals are surely great for the consumer, but they're really going to eat away at these stores' profits.

So it'll be interesting to see what does happen. I would imagine we'll see a big shakeout after all is said and done. We will see a couple of these stores and a couple of these malls ultimately go under.

PHILLIPS: Wow. You know, that what I was wondering if these after Christmas sales could even save some of these companies, some of these retailers.

GIBBONS: Yes, I know. I don't think they're necessarily going to save face. I will say, though, this week coming up is a critical week for retailers. It's a time when they usually make one-third of all their sales. So, again, they'll being doing some heavy-duty promoting. Heavy-duty incentives out there for the consumers.

But I don't think they have any great expectations. I think they're just trying to get rid of what they've got and, you know...

PHILLIPS: Yes, move on.

GIBBONS: ... on to 2002. Yes.

PHILLIPS: Right, fight it and move on.

Well Vera, real quickly, I've been sitting on the fence about this -- refinancing. Interest rates are rock bottom, as low as they can go here. Do we refinance, finally, now?

GIBBONS: You might as well. Now is the time to do it. We've had 11 cuts for the year and four rate cuts since September 11. Psychologically, these rates have been great for consumers. And, of course, if you haven't refinanced your mortgage, go ahead and do it. Don't wait on this one.

PHILLIPS: Vera Gibbons, "SmartMoney" magazine. Thanks for the smart advice.

GIBBONS: Thanks, Kyra.

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