The holiday shopping season may be technically over, but that doesn't mean that the flurry of activity at the leading retailers has ended. Between the returns, exchanges, and post-holiday sales, it's not as if your nearest strip mall has been able to catch much of a breather. However, more important for the financial state of this timely sector is the proliferation of gift cards.
As the gifts that keep on giving (until they are bled dry to a balance of nil, of course), they are extending the fiscal punch of the retailing seasonality. Consider the world's largest retailer, for instance. Although Wal-Mart (NYSE:WMT) announced that it is looking at relatively bland same-store sales growth on the low of end of its initial 3%-5% range, this month it saw gift card sales surge by 20%.
Amazon (NASDAQ:AMZN), after another record season, sold 70,000 gift cards on Christmas Eve alone. In sum, gift cards have come to consume 10% of the holiday spending dollar as procrastinators and reformed fruitcake re-gifters have settled on the medium as the gifting currency of choice.
If you find yourself holding on to a piece of plastic from Borders (NYSE:BGP), Best Buy (NYSE:BBY), or even Cheesecake Factory (NASDAQ:CAKE), welcome to the trend of milking the 2003 season into 2004.
Retailers do not account for gift card sales as they are bought, only consumed. That may help explain part of Wal-Mart's healthy 8.6% rise in comps in Jan. 2003. More importantly, it makes one hopeful for another strong showing next month. While the start of the calendar year has been traditionally a time to keep discretionary spending low as holiday debts are tackled, gift cards are helping smooth out that seasonality.
So go ahead and take your holiday decorations down and pour the last of that eggnog down the drain, if you must -- just don't write off the season until the seasonal spending is done.
How did your holiday shopping go? Will gift card sales really lift Wal-Mart's sales in the coming weeks? What else lies in store in 2004 for the world's leading retailer? All this and more -- in the Wal-Mart discussion board. Only on Fool.com.
