December Retail Sales Report Retail appears to have gotten back to business as usual this past holiday season. Shoppers didn't disappoint merchants, buying presents at both low- and high-end prices, from jewelry and electronics to clothes and shoes. Most analysts are predicting sales will show year-over-year increases of 3% to 4% on Thursday, when major merchants post December figures and holiday totals.

"It was really a broad-based strength we saw in December," says Mike Berry, director of industry research for MasterCard (MA) SpendingPulse.

Nearly every retail sector posted increases, from essentials such as food and auto repairs to luxury goods and jewelry, according to SpendingPulse, which tallies up sales according to payment form, such as credit cards or cash. Some sectors that posted lower numbers, such as department stores and electronics retailers, were affected more by pricing pressures than low traffic, Berry notes.

"They're Still Buying"

Apparel, considered a gauge of discretionary spending, was up 10.9% in December, jewelry was up 10.4% and luxury goods sales rose 8.5%, according to SpendingPulse. Among the underperforming segments, department store sales were down 2.5%, while electronic retailers were up only 1.2%, despite moving a lot of inventory.

"Shoppers are out there, they're still buying electronics and such, and they're buying more," says Berry. But he notes low prices hurt both electronics and department stores. Electronics retailers had strong traffic and unit sales, but those factors were offset by lower prices for big-ticket items such as TVs and laptops. Department stores' sales totals dropped due to store closings during the year, as well as falling prices.

"They had to do a little bit of discounting to keep traffic coming in," Berry says.

Retailers laid out a wide assortment of promotions and offers to lure shoppers in this holiday season, and experts agree the shoppers responded, despite continuing worries about the slow pace of the economic recovery and continuing weakness in housing and job markets. However, observers point out the discounting was more measured and better organized than it was in 2008, when the onset of recession caught retailers overstocked for the holidays and forced them into fire-sale pricing to clear excess inventory.

"A Few Upside Surprises"

The heavy promotional activity spurred traffic this year, but there appeared to be less need for post-holiday discounts, which has eased concerns about profits, noted Michael Exstein, retail analyst at Credit Suisse First Boston (CS), in a note to investors. However, Exstein warns that inventory growth during the fourth quarter was beating sales growth for the first time since 2008, which -- coupled with the aggressive promotions -- could slow down profit growth.

"Overall, we think December should be in line with expectations with a few upside surprises given all of the positive news that has surrounded the holiday shopping season," Extein wrote. "The key to better understanding the overall 'health of the consumer' will be when Walmart reports its sales for the fourth quarter in February." Walmart (WMT), the world's largest retailer, doesn't report monthly sales figures publicly.

"In the end, December will prove to be a relatively healthy sales month for retailers," says Michael Niemira, chief economist of the International Council of Shopping Centers. He's expecting a sales increase of about 3.5% or higher.

Despite snowstorms along the East Coast on the weekend after Christmas, warmer temperatures afterward helped merchants make up lost ground on post-holiday sales, Niemira noted in a report. Sales for the week ending Jan. 1 rose 3.6% above the same week in 2009, and 0.4% above the week of Christmas, which itself saw sales 4.8% higher than the year-ago period.

There could be some spillover effect into the following months. A survey by the ICSC found that gift card sales this holiday season reached their highest level since 2007. But the rate at which shoppers redeemed them after Christmas was down from last year -- 10.8% of value, versus 20.9% in 2009. And the number of shoppers planning to redeem cards in January was lower than in the past two holiday seasons. That leaves room to shift more of the sales associated with these cards to the first quarter of 2011, perhaps keeping some of that holiday momentum going.

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

So did you get anything good for xmas?

January 05 2011 at 12:25 PM Report abuse -1 rate up rate down Reply

What's a libbie??? Is that like an Ilkee?? in some martian language? LOL!

January 05 2011 at 12:24 PM Report abuse -1 rate up rate down Reply
1 reply to gardeningatnite's comment

Oh! I am sorry, I thoght you were talking about old Scooter Libby, remember him....the disbarred American attorney, convicted felon, and former advisor to Ex-President Dick Cheney...........Character guy? eh?

January 05 2011 at 12:32 PM Report abuse -1 rate up rate down Reply

Sen. Jon Kyl (R-AZ) complained that Sen. Harry Reid was “disrespecting” Christians by expecting lawmakers to return to work the week after Christmas.........December 15th, 2010!!

January 05 2011 at 12:16 PM Report abuse -2 rate up rate down Reply
1 reply to gardeningatnite's comment

Just different postings of the same story........we call em......Facts!

January 05 2011 at 12:21 PM Report abuse -3 rate up rate down Reply

12/15/10 12:13 PM EST Updated: 12/16/10 10:04 AM EST
Sen. Jim DeMint (R-S.C.) called Democrats' push to force through an arms control treaty and an omnibus spending bill right before Christmas "sacrilegious," and warned he'd draw the process out to wage his objections.........Dtaes don't lie??? LOL!

January 05 2011 at 12:15 PM Report abuse -3 rate up rate down Reply

"GOP Senators Call Christmas Senate Session Sacrilegious"..........December 15th, 2010......facts are troublesome to conservatives?

January 05 2011 at 12:12 PM Report abuse -2 rate up rate down Reply

Congress exists of Dems, Reps, and Indy's ,,,that would be all of them practicing the same work ethic....this is true!.... So why was it sacrilegious to work before xmas??? (pretty strong republican word?)

January 05 2011 at 11:46 AM Report abuse -2 rate up rate down Reply
1 reply to gardeningatnite's comment

December 16th, 2010 is xmas day..........what religion are you into???

January 05 2011 at 12:10 PM Report abuse -3 rate up rate down Reply

Less time in congress equals more time on the golf course with lobbyists for special interest private country clubs, no less.

January 05 2011 at 11:35 AM Report abuse -1 rate up rate down Reply
6 replies to Susie's comment

I am the republican emphasis on repeal, repeal and more repeal; just a way to kill their congressional time, because they know that they cannot create jobs in reality??....Corporate america has the 'key to the highway' and they could care less about america!...And Mr. Cantor wants less time in congressional sessions? that like (not) earning your money?

January 05 2011 at 11:34 AM Report abuse -1 rate up rate down Reply
2 replies to gardeningatnite's comment

Isn't that what having a 'staff' is for???

January 05 2011 at 11:41 AM Report abuse -1 rate up rate down Reply

It would be refreshing to find a Congressman whose keen sense of the obvious shines through enough to admit that Congressmen don't create jobs (although they kill plenty of jobs). If you are saying the R's understand this, then we should be relieved to know the intellegince of a portion of the Foggy Bottom goons is at least on the rise (from an admittedly very low starting point).

January 05 2011 at 11:59 AM Report abuse +3 rate up rate down Reply

One republican congressman who attached an earmark to his amendment to a House bill had to then run around on the House floor like the chicken he is begging his colleagues to vote against his very own came up too close to the might have gotten some unwanted

January 05 2011 at 11:32 AM Report abuse -1 rate up rate down Reply

LOL......and Republican Texas coward (governor) Rick Perry was talking about secession while phoning President Obama asking for more federal troops......another of my favorite hypocrites!

January 05 2011 at 11:29 AM Report abuse -1 rate up rate down Reply