Holiday weakest since 1970, more retail cuts seen
Source: Reuters
Not since at least 1970 has holiday shopping in the United States posted such dismal numbers, according to data released on Tuesday that was likely to prompt retailers to curtail their business even more in 2009.
The International Council of Shopping Centers said sales fell even in the week that included Christmas Day. It expects November and December sales to be down 1.5 percent to 2 percent, which would be the first decline since the ICSC began tracking holiday sales in 1969.
While there is still some time for retailers to capture holiday sales, “I don’t have a lot of hope that it gives you a surprise lift,” said ICSC Chief Economist Michael Niemira. “The discounts are so great and demand is so uncertain and uneven.”
In similarly grim news, U.S. consumer confidence fell to a record low in December, while prices on U.S. single-family homes in October sank 18 percent from a year ago, according to new data.
Once the holiday ends, weak spending in the first half of 2009 could pressure retailers into additional store closings, said Kim Picciola, an analyst with Morningstar. The sector has already tried to cut its spending, with some retailers even seeking bankruptcy protection.
“The first half of 2009 is going to be another difficult period for retailers,” Picciola said. Morningstar does not expect retail sales to improve until 2010.
Investors took the gloomy figures with a grain of salt and selectively purchased retail stocks, betting a bottom may be forming for the beaten down sector. The Standard & Poor’s Retail Index rose 1 percent in early afternoon trading.
“Consumer stocks have bottomed out and we believe that this is one of the better areas for upside opportunity during the next six months,” said Richard Hastings, a consumer strategist at Global Hunter Securities LLC.
According to the ICSC-Goldman Sachs Weekly Chain Store Sales index, sales at U.S. chain stores fell 1.8 percent in the week ending December 27, compared with the previous year, while sales fell 1.5 percent compared with the prior week.
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