U.S. Holiday Sales Increase 3%, Less Than in 2005 (Update5) By Heather Burke Dec. 26 (Bloomberg) -- U.S. holiday retail sales rose a disappointing 3 percent from 2005 as a slowing housing market and higher energy costs cut into spending, MasterCard Advisors said. The gain is less than the 5.2 percent increase last year and the smallest growth since the survey started in 2003, MasterCard Advisors said today in a statement. Electronics and luxury goods had the strongest sales, according to the company's SpendingPulse survey. ``Retailers are going to find that this was a pretty modest Christmas season,'' Britt Beemer, chairman of Charleston, South Carolina-based America's Research Group, said in an interview. Holiday sales slowed this year because of increases in interest rates and gasoline and heating prices, said Michael McNamara, vice president of research at MasterCard Advisors. Warmer-than-normal weather in some regions of the U.S. hurt apparel sales, he said. Retail sales climbed 23 percent on the weekend before Christmas as consumers hit the stores for last-minute shopping, and that may have helped push revenue to the 5 percent gain forecast for the season by the National Retail Federation. That would be the slowest pace since 2002. Wal-Mart will issue a preliminary report on this month's sales on Dec. 30. It has forecast a gain of up to 1 percent. Most other retailers will disclose sales for December on Jan. 4. `Some Problems' ``In terms of real dollar spending, I think that we've got some problems,'' said Richard Hastings, New York-based analyst with Smyth-Bernard Sands. ``This year, unfortunately, I think Q4 earnings are going to be a problem.'' The S&P 500 Retailing Index dropped 1.55 to 497.12 at 4:15 p.m. It has fallen less than 1 percent since Oct. 31. Wal-Mart Stores Inc. gained 57 cents, or 1.3 percent, to $46.11 in New York Stock Exchange composite trading. ``The season came in a little softer than some expected,'' said McNamara of MasterCard Advisors, a unit of Purchase, New York-based MasterCard Inc. ``As we are going into 2007, we don't have the same consumer momentum as we did heading into 2006.'' The MasterCard data from the day after Thanksgiving to Christmas Eve are adjusted for an extra shopping day compared with last year. It's based on sales using cash, checks and MasterCards. On an unadjusted basis, 2006 holiday retail sales rose 6.6 percent, a smaller gain than 8.7 percent in 2005. No Category Winner ``This is the first year, and I've been doing this for 20 years, where there was no clear-cut category winner,'' said Beemer. Apparel lagged overall retail sales as warmer-than-average temperatures held down demand for coats, gloves and other cold- weather apparel, McNamara said today. Men's clothing and footwear performed better than women's and children's, according to MasterCard. ``There is no question that the coat business and the fur business were hurt severely,'' Michael Gould, chairman of Bloomingdale's, which is owned by Cincinnati-based Federated Department Stores Inc., said in an interview. Retailers are looking to the week after Christmas to pick up sales. About 18 percent of store traffic will occur this week, when people redeem gift cards, ShopperTrak RCT Corp. co- founder Bill Martin said last week. Gift Cards The NRF has forecast the average amount spent on gift cards by consumers will rise to $116.50 this holiday season from $88 last year. ``Certain sectors like department stores will be pulling out the stops for people to redeem gift cards and provide additional discounts to try to bolster sales that were otherwise relatively soft,'' said Wayne Best, senior vice president of economic analysis for Visa USA. Best cut his forecast for November and December sales growth to about 6.5 percent from 7.5 percent. Stores opened early and slashed prices today to lure shoppers for post-Christmas purchases. Macy's, owned by Federated, offered a $10 ``savings pass'' good on selected items today and tomorrow before noon. Parking lots at malls owned by Taubman Centers Inc. were about 90 percent full as of 1 p.m., according to a round-up of mall reports e-mailed today by spokeswoman Karen MacDonald. About 70 to 80 percent of people were making purchases, with apparel, electronics and holiday items popular, according to the report. `Long Way to Go' ``The season still has a long way to go,'' said Bloomingdale's Gould. ``Post-Christmas is bigger and bigger every season. January is still a very important month for us.'' Amazon.com Inc. said today that 2006 was its best holiday season ever, with Dec. 11 its busiest day, when customer orders exceeded 4 million items. Yahoo! Inc. said today the number of people going to the Yahoo! Shopping Web site climbed 34 percent in December 2006 from a year earlier. The Washington-based NRF forecasts retail sales will rise 5 percent to $457.4 billion in November and December combined. That would be less than the 6.1 percent gain last year. About 32 percent of the retail industry's profit and 27 percent of sales came in the last quarter of 2005, according to the International Council of Shopping Centers, a New York-based trade group that tracks about 75 chains. . Last Updated: December 26, 2006 16:40 EST
Who cares, the market has a counter argument for everything, good sales yee haww lets rally, bad sales means reat cuts yee haww lets rally. Bottom line all news is good news yee haw lets rally. All next year if the news is good thats great means the economy is strong, if the news is bad it means rate cuts from the fed, never mind that the market is soaring, still means rate cuts.
Does this mean you will stay long all of next year? If so, I'd love to see your PNL by summertime... RoughTrader