Holiday Season Retail Update

Despite the long weekend prior the Christmas holiday, retail sales for the overall period only demonstrated growth of 2.8%, well below the modest expectations of 3.6%.

Retailers extended hours and cut prices to draw shoppers in the last week. In many ways the strategy worked; sales for the week surged 18.7% over the extended weekend compared to the year earlier period. For many retail outlets this helped the season turn from hopeless to tolerable.

Some chain stores such as Target announced reductions in expected December sales. Target was expected to grow same-store sales 3 to 5% instead they are seeing a range of -1 to 1%. Specialty retailers fared better, most were able to hit their modest sales figures. However some traditionally strong sales areas such as women’s clothing showed reductions above 5%; while electronics remained solid.

The market was somewhat buoyed by the consumer confidence figures released today, despite global events in Pakistan. The Consumer Confidence Index advanced to 88.6 in December from a revised 87.8 in November; better than the expected reading of 87.0. Retailers took the consumer confidence readings as a positive sign for the post holiday shopping season during which many shoppes use gift cards and hunt for post-holiday bargains. Initial foot traffic data during the past couple of days supports this optimistic picture.

All-in-all it appears that the final figures will show that the retail holiday season trailed expectations, but was not drastically weak. This show of consumer strength in face of falling real estate values, increasing debt, increasing food costs, and increasing fuel costs demonstrate a positive outlook as the economy rolls into 2008.