By Joseph Galante
Wednesday, December 26, 2007
A surge in spending over the weekend may not have been enough to rescue Target, Sears Holdings and Macy's from the slowest holiday spending season in five years.
MasterCard's consulting unit said yesterday that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 declined 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the last weekend before Christmas, Chicago-based ShopperTrak RCT said Monday.
"It's not going to overcome the negative forecasts," Frederick Crawford, managing director at Southfield, Mich.- based AlixPartners, said of the weekend. "It's going to be a good start, a very weak midsection and a strong finish."
Gasoline at $3 a gallon and rising food prices have discouraged shoppers from spending during November and December, which account for 20 percent of retailers' annual revenue, according to the National Retail Federation in Washington.
Target, the second-biggest U.S. discounter, said Monday that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving.
Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation. MasterCard's holiday growth figure was the lowest in at least three years.
Less than one-fifth of consumers finished their holiday shopping by Dec. 16, according to the International Council of Shopping Centers in New York. J.C. Penney, Sears and Toys R Us tried to lure late buyers with discounts over the weekend, helping boost U.S. retailers' sales by 7.6 percent on Saturday.
Shoppers buying online led the growth in spending, with Internet sales gaining 22 percent from Nov. 23 though Dec. 24, said Michael McNamara, vice president for research and analysis at MasterCard Advisors.
"If you were expecting this holiday season to stimulate a new ramp-up in growth, I think you'd be disappointed," McNamara said. "I think the vast majority of people in the marketplace had modest expectations."
Apparel rose 1.4 percent from a year ago, McNamara said. Men's clothing climbed 2.3 percent, while sales of clothes for women fell 2.4 percent.
Luxury goods, excluding jewelry, rose 7.1 percent from the comparable period last year, and footwear sales increased 6 percent.
MasterCard Advisors' SpendingPulse surveys retailers across the United States. Its figures are based on sales in the MasterCard network and estimates of other forms of payment, including checks and cash. MasterCard is the second-biggest U.S. credit-card company.
Last year's holiday season grew 6.6 percent over 2005's holidays. Two years ago, retail sales grew 8 percent from the previous year, MasterCard said.
Although Target's customer visits increased for the week ended Dec. 22, "this increase was not sufficient to compensate for the unfavorable traffic trends that carried over into December from the week following Thanksgiving," the Minneapolis-based retailer said.