There's No Holiday Cheer in Sears' Early Christmas Push
It's not the first time Sears Holdings has pushed the envelope by using Christmas in its advertising earlier than what would be considered seemly. For example, a few years ago, it created an online shop called "Christmas Lane" that appeared in July, but the limited nature of that move kept the rancor down.
Not so today. This week, Kmart really went beyond the pale by running TV ads promoting its Christmas layaway services just as kids were returning to school.
According to the folks at AdAge, at 105 days before the holiday, it marks the earliest time ever a retailer has tried to juice its sales by using Christmas in its advertising. While the story goes on to note that the National Retail Federation says some shoppers do start this early -- 12% actually begin Christmas shopping before September, while another 6% use the start of the school year to get a head start on their seasonal excess -- Sears' attempt to capture that early mindshare had consumers and critics alike lamenting the lack of propriety surrounding the effort. Apparently, its Facebook page lit up with people crying, "Too soon!"
Retailers, though, are offering up cautious guidance for the back end of 2013. Consumers are apparently reluctant to go to excess with their spending, and that may cause them to follow Kmart's lead in advancing holiday creep.
Macy's reported earnings that rose 7% year over year, but those were well below analyst expectations, leaving it to cut its outlook for the rest of the year. It lowered its fiscal 2013 earnings estimates to a range of $3.80 to $3.90 per share versus its prior guidance of $3.90 to $3.95 per share.
Similarly, Target reported earnings that were at the top of its guidance for the second quarter, even as comps were lower than anticipated, but now says its full-year adjusted profits will come in at the low end of the guidance it gave of $4.70 to $4.90 per share. Wal-Mart as well took the opportunity of its latest earnings report to scale back expectations, cutting its full-year outlook to $5.10 to $5.30, compared with the $5.20-to-$5.40-per-share view previously offered. As CEO Mike Duke noted, "The retail environment was challenging across all of our markets."
Not that it's any surprise, really, but Sears' own earnings report last quarter recorded further sales slippage, and it likely is at least partly responsible for its decision to beat everyone else out of the gate in hawking its Christmas service. Revenues fell by almost $600 million in the second quarter, or 6%, to $8.9 billion, while losses widened to $1.83 per share from $1.25 in the second quarter of 2012.
Although it makes sense to promote layaway services earlier than other programs, it's not the first time Sears has pushed one. It was among the first retailers to resurrect the concept several years ago after it had lain dormant as consumers turned to the Internet to do their shopping. But layaway programs found new cachet during the recession, and Sears even added the innovative concept of combining it with online shopping.
While the discount retailer can sometimes nail its creativity with sharp, witty ads -- like its well-executed "Ship My Pants" spot -- this latest effort seems to push the envelope too far and risks alienating customers who are already upset by season creep. When even beer lovers fret over pumpkin ale appearing on store shelves before summer ends, Sears forcing consumers to think about Christmas when they just dropped off Sally and Johnny for their first day of school is likely to create a silent night of returns rather than a winter wonderland of profits.
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The article There's No Holiday Cheer in Sears' Early Christmas Push originally appeared on Fool.com.Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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