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Holiday Sales Paint Mixed Picture For Retailers

5:23 PM, Jan 14, 2014   |    comments
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Jayne O'Donnell, USA TODAY
Retailers enjoyed a respectable holiday shopping season, but not quite as good as forecast, according to a report out Tuesday.

Retail sales excluding automobiles, gas stations and restaurants rose 3.8% in the November and December holiday shopping period, the National Retail Federation said. That fell just under the group's forecast of a 3.9% forecast, but ahead of 2012's sales growth of 3.5%.

The NRF results were far better than Tuesday's report from the Commerce Department, which showed an 0.2% increase in December over November. Excluding vehicles, retail sales rose 0.7% from November.

But there's disagreement over how positive the news is for retailers. Ken Perkins, president of stock analysis company Retail Metrics, says the season delivered "holiday coal in most retailers' stockings."

Of 29 retailers that have recently issued earnings guidance for their current quarter, which includes the holiday period, Perkins said 25 of them were negative. He attributes retailers' problems to a shorter holiday shopping season, deeper discounts and a lack of must-have items.

The government's results for December included the increasingly busy Monday after Thanksgiving, known as Cyber Monday, which fell on Dec. 2 this year. Most retailers feature deep online discounts that day.

The Commerce Department also lowered its estimated sales increase for November to 0.4% from 0.7%. October's increase was cut to 0.5%, down a tenth of a percentage point.

Retail sales in December, excluding automobiles, gas stations and restaurants, rose 0.4% from last month and 4.6% from the same period a year ago, according to the NRF's analysis of the federal data.

Non-store holiday sales, which includes online sales, grew 9.3% to $95.7 billion.

NRF President and CEO Matthew Shay has a far more optimistic take on the state of retail than some analysts.

"Despite facing a truncated holiday season, severe weather, and shaky consumer confidence, retailers rose to the challenge and executed their strategies with proven success," Shay said in a statement. "Considering that retail sales are an important barometer when measuring the overall health of our national economy, this report provides a level of true optimism that the recovery is picking up steam, and once again, retail leads the way."

NRF Chief Economist Jack Kleinhenz acknowledged, however that "retail sales have been volatile all year and the holiday shopping season was no exception." He predicted "steady growth in the New Year" and that that growth in consumer confidence will reduce the need for retailers to discount so heavily, which hurts their bottom lines.

Others shared Perkins' concerns. IHS Global Insight economist Chris Christopher said that while the sales data looks good at first glance, "when you dig into the details, the numbers are not very positive."

How some retail categories fared in December compared to November:

• Building material and garden equipment and supplies dealers stores' sales dropped 0.4%.

• Clothing and clothing accessories stores' sales were up 1.8%.

• Electronics and appliance stores' sales were down 2.5%,

• Furniture and home furnishing stores' sales decreased 0.4%.

• Sporting goods, hobby, book and music stores' sales fell 0.6%.

Christopher says growth in apparel sales may be attributable to cold weather last month and notes many of the strong areas of spending were in gasoline, natural gas and electricity, "not the kind of things people like spending money on."

Retailers will learn their lessons before the next holiday season and consumers may see the effects soon, Christopher says.

"They are going to be a little nervous about discounting too heavily and they'll have to reevaluate what they stock up on," he says. "In January, there will be more markdowns to get rid of inventory, but then things will pick up on price side in February and March."

 

 

 

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