Bad News for Santa
Just how bad were holiday retail sales? It seems to depend on who you ask, or what set of figures you want to use, or when you want to ask. The National Retail Federation stuck throughout the holiday to its forecast of a 5% increase in holiday retail sales, and is waiting to reconcile that number with the U.S. Department of Commerce figures scheduled to be released Jan. 12. But the numbers being reported last week by various analysts and the media—including The Wall Street Journal, the New York Times, and trade outlets such as DM News, Advertising Age, and Internet Retailer—are in general agreement that it was at best a lackluster holiday season, at least for traditional retailers and department stores.
The average increase in December sales was 3.1%, down from 3.5% the previous year, according to the International Council of Shopping Centers. Some luxury retailers do appear to have done well: Nordstrom with a 9% increase in same-store sales, and Saks with an 11% increase; Costco had a 9% gain, Target Corp. gained 4.1%, and Federated Department Stores’ same-store sales rose 4.4%. Wal-Mart, however, had the worst December sales in its history (a 1.3% increase), while Pier 1 sales dropped 10.7% in December.
One the one hand, analysts are citing as reasons for slow sales everything from the general economic climate—fewer home equity loans being taken out by middle-income consumers, serious economic pressure on lower-income consumers because of job erosion and static income growth, rising gas prices—to the weather (an unusually mild winter in the Northeast kept consumers from buying cold-weather clothes).
On the other hand, the retail results posted in the last week don’t even include online sales figures and sales of gift cards, which the NRF estimates accounted for $25 billion in holiday sales. According to comScore Networks, holiday online sales were 26% higher in 2006 than in 2005, at $102.1 billion. Gift-card redemptions in January could still raise overall holiday sales numbers.
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