Year-End Sales May Not Signal Recovery

Posted by: John Tozzi on December 21, 2009

Strong holiday sales are buoying some small businesses and blunting losses from a mostly dismal year, but the increase may not sustain them into 2010.

Case in point: Aunt Sally’s Praline Shops, the New Orleans pecan candy maker that we’ve been chronicling along with other businesses through this holiday season.

CEO Frank Simoncioni said today that December sales are up 30% over 2008. But for the year, total sales are only on pace to rise 5%. “I’m happy for December, but the rest of the year, all year long was really a drag. We may not be able to offset all those losses throughout the year just because of holiday sales,” he says.

Simoncioni increased staff from about 35 to 52, but most of those positions are seasonal and won’t continue into next year. Aunt Sally’s expects to turn a profit on sales of about $3.5 million. But higher prices for ingredients like sugar (which has doubled in price this year) are squeezing the candymaker’s margins.

All three of Aunt Sally’s businesses — a retail store, wholesale, and online sales — have seen sales grow. The company has gotten national exposure with spots on QVC and the Today Show. The shop is busy enough that they have to ask callers to hold immediately.

Still, Simoncioni questions whether the holiday rush will give way to another slow year or if the growth he sees now is the start of a sustained recovery. Sales tax receipts in New Orleans have been below expectations, meaning shoppers and tourists haven’t been as spending as much as the city hoped. “I don’t know what to expect. The recession seems to be lasting longer than we thought,” he says. For now, he’s thankful for year-end sales that will help Aunt Sally’s end the year in the black.

Reader Comments

Domenick Celentano

December 22, 2009 10:23 AM

Aunt Sally’s is what we call in marketing, an Affordable Indulgence. The most well known affordable indulgence is Starbucks…. This fact is why they have not fallen off the cliff given the economy. Affordability now is trumping Value.

Consumers have a need to feel indulgent, so a $5 cup of coffee is a way to indulge when one can't afford an expensive dinner or nice piece of jewelry.

Consumers don't need Pralines, but what a great way to treat yourself or for that matter to treat someone else.

Aunt Sally’s probably is not familiar with Affordable Indulgence as a concept in marketing and it would serve their business well to consider positioning themselves as such.

Domenick Celentano
College of Business & Public Administration
Kean University
http://kean.domenickcelentano.com/
http://managementofsmallbusiness.blogspot.com/

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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