/www.bloomberg.com/ Melbourne, Dec. 27 (Bloomberg) -- Coles Myer Ltd., Woolworths Ltd. and other Australian retailers will probably meet their target of a 4 percent increase in holiday sales, helped by a last-minute rush and post-Christmas bargain hunters, according to industry figures.
Australian retailers are faring better than those in the U.S., where the worst holiday shopping season in more than 30 years forced Wal-Mart Stores Inc., the world's biggest retailer, to lower its December sales forecast and led Sears, Roebuck & Co. and others to cut prices as much as 80 percent to clear shelves.
After a slow start to the busiest month of the year, which led Coles to hold a one-day sale at its department stores, sales in December should meet forecasts of A$18.5 billion ($10.4 billion), the 12,000-member Australian Retailers Association said. Spending on Christmas goods accounts for about a third of the total.
``There was more minor discounting in the lead up to Christmas, but the period finished on a very strong note -- the last four days were phenomenal,'' said Stan Moore, the group's policy director. Post- Christmas clearance sales, which started yesterday, have so far beat retailers' expectations, he said.
Australian merchants are doing better than last year, buoyed by interest rates near the lowest in 30 years and an economy that's added about 225,000 jobs this year, pushing the unemployment rate to near a two-year low.
Compare that to the U.S., where the unemployment rate last month matched an eight-year high of 8 percent, and the benchmark Dow Jones Industrial Average is headed for its third yearly loss.
Holiday Crowds
Coles and Woolworths -- the No. 1 and 2 retailers respectively -- and David Jones Ltd. yesterday started offering discounts of as much as 50 percent to empty shelves of holiday-related goods that were passed over earlier.
Coles Myer shares, which have fallen 25 percent this year, fell 1 cent to A$6.32 at the 4 p.m. Sydney close on the Australian Stock Exchange. Woolworths, up 5 percent this year, fell 5 cents to A$11.40.
Unsold merchandise is usually discounted sharply so new products can be moved in. Retailers often rely on the week following Christmas to make up for any shortfalls in sales as shoppers scout around for bargains and spend the cash or vouchers they received as gifts.
``We certainly weren't disappointed with'' the start to clearance sales, said Scott Whiffin, a spokesman for Coles Myer. ``The crowds were pretty phenomenal'' and ``people are out there looking for a bargain.'' He didn't provide figures.
Clothing, home wares and electronics have featured prominently in clearance advertisements this season. Coles Myer and David Jones are offering 50 percent off women's fashion, cosmetics, bed linen and shoes, and 40 percent off some men's clothing. Harvey Norman Holdings Ltd. has cut prices by as much as 50 percent on bedding.
Men's Wear
``It's not been hard to get the customers to come in, which is great,'' said Don Grover, stores director at David Jones, the second- ranked department store owner.
He said best-selling items yesterday included men's wear, as the retailer offered 40 percent reductions on business suits and shirts. Clearance sales have had ``a good start,'' he said, without providing actual figures.
Woolworths, which makes most of its money selling food and other groceries, expects to meet its first-half sales and profit forecasts after ``good, steady, strong sales'' so far in December, Chief Executive Roger Corbett said.
``These are not boom conditions, but we've got a good, steady, strong Christmas,'' Corbett said in an interview. Clothing sales at its Big W department store chain continued to be strong in December, he said, without being specific.
December and January are the busiest months for retailers because of Christmas, the summer vacation in Australia and annual stock clearances. Department stores make 20 percent of annual sales in December, with consumers spending 40 percent more in that month than the average for the other 11 months.
Retailers, including Coles Myer, slashed inventory this year to avoid more profit-eroding discounts than necessary. Discounting hurts margins, or the profit made on each dollar of revenue