Holiday Sales Fall Short

Tuesday, December 26, 2006 | 05:59 AM

Retail_u_20061225192424 Back in November, we noted that Retail Sales were the Canary in the Coal Mine. In the coming weeks, we will find out just how mediocre the retail shopping season has been, as well as the hows and the whys it happened.

But the early data has come in,  and it is decidely unimpressive: Despite early forecasts of double digit sales gains for this holiday season -- and some surprisingly strong but questionable data for November -- it appears that the 2006 season's sales will be disappointing.

That's according to data culled this past weekend from VisaUSA, and from ShopperTrak. Each used very different methodologies for forecasting retail sales.

According to Visa USA (via the NYTimes):

"Visa USA, the credit card company, said yesterday that it would lower its closely watched forecast for holiday spending. Based on purchases by credit and debit card holders, Visa said sales rose 6.5 percent in November and December, compared with the same period last year, down from its initial forecast of a 7.5 percent gain.

The company’s unexpected downward revision — and the millions of dollars in lost sales it represents — could have broad implications for the nation’s merchants, who count on purchases during the holiday season for nearly half of their business."

“We knew spending would be slower than last year,” said Wayne Best, senior vice president of economic analysis at Visa USA. “But it seems to be even slower than we predicted.”

Retail performance was described as "lackluster" -- despite respectable last-minute sales over the weekend. And those who did shop spent less, according to Visa USA -- the cost of the average purchase dropped by 1 percent in December.

Consumers completed their shopping earlier this year than last, and aggressively sought out discounts. They didn't have to look to hard, as this year saw earlier, deeper and more widespread price cutting than recent years.

According to ShopperTrak, December sales are up about 4.3% compared to 2005. That's shy of most analysts pre-holiday predictions. Expectations are now for the slowest pace since 2002:

"Bargain hunters and latecomers flocked to stores this weekend as the retail industry made its last big push for pre-Christmas sales with increased discounts and other come-ons. But the late-buying binge was not enough to meet sales goals, and retailers are now turning to post-Christmas business to make this season a merry one, according to one report from a national research company.

"These were big days, but they came up short in terms of traffic and sales," said Bill Martin, co founder of ShopperTrak RCT Corp., a research firm, referring to this past Friday and Saturday. ShopperTrak monitors total retail sales at more than 45,000 outlets"

The main problem? The WSJ note that "Shoppers did come out in full force this past weekend; they just didn't spend as much as last year." Spending was still "very soft compared to last year."

That implies that the US consumer is stretched. This should come as no surprise to attentive observers, given what we know about consumers' savings rate, their Real Wage gains, and the loss of their free cashflow via declining mortgage equity extraction . . .


>>>




Sources:
Last-Minute Shopping Falls Short
MICHAEL BARBARO
NYT, December 26, 2006
http://www.nytimes.com/2006/12/26/business/26retail.html

Shoppers dash retailers' hopes
Final weekend not as robust as hoped
Anne D'innocenzio
AP, December 25, 2006
http://www.heraldnet.com/stories/06/12/25/100wir_a3shop001.cfm

A Lackluster Last Weekend
High Demand for Electronics Wasn't Enough to Offset Tepid
Sales of Cold-Weather Apparel
ANN ZIMMERMAN, STEPHANIE KANG and GARY MCWILLIAMS
December 26, 2006; Page B1
http://online.wsj.com/article/SB116710056784559386.html

Christmas' arrival doesn't signal the end of holiday shopping
Jayne O'Donnell
USA TODAY,  12/25/2006 10:07 PM ET 
http://tinyurl.com/yndb5f 

Tuesday, December 26, 2006 | 05:59 AM | Permalink | Comments (26) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00d8346274ba69e2

Listed below are links to weblogs that reference Holiday Sales Fall Short :

» Holiday Retail Sales: Just What the Doctor Ordered? from A Dash of Insight
Preliminary figures for holiday retail sales are in, and they are just what the doctor ordered---Dr. Bernanke, that is! As any investor must know by now, the Fed is trying to restrain inflationary expectations in the interest of long-term economic [Read More]

Tracked on Dec 26, 2006 4:31:57 PM

Comments

Note that all these percentages are a apples and oranges, based on different measures -- Visa measures credit card usage, Shopper Trac is traffic based extrapolation.

We will get the final holiday sales % gains in January.

Posted by: Barry Ritholtz | Dec 26, 2006 6:12:38 AM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner