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Tue, Nov 28, 2006 - Page 10 News List

Thanksgiving weekend spending rises 19 percent

BLOOMBERG

US consumers shopping over the Thanksgiving weekend spent 18.9 percent more than they did last year as retailers slashed prices to attract holiday shoppers.

Consumers spent an average US$360.15 each from Nov. 23 through to Sunday, up from US$302.81 a year earlier, the National Retail Federation said in a statement. Fewer people shopped, with about 140 million visiting stores during the four days including Thanksgiving, down from 145 million last year.

Shoppers limited much of their spending to sale items such as Wal-Mart Stores Inc's US$997 37-inch LCD TV and Sears Holding Corp's discounted jewelry and toys, said consultant Howard Davidowitz. The discounting may threaten profit margins during a quarter when retailers collect a third of their annual earnings.

"The retailers made their own bed here," said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich. "It's almost this mentality of `Don't worry if you're losing money on every transaction, because you'll make it up on volume.'"

The company manages US$8.2 billion, including Wal-Mart, Nordstrom Inc and Chico's FAS Inc shares.

Sales on Nov. 24, called Black Friday because retailers once considered it the day they turned profitable for the year, rose 6 percent from last year to US$8.96 billion, according to estimates by research firm ShopperTrak RCT Corp.

The growth in weekend sales outpaced last year's gain, when consumers each spent an average 14.2 percent more than in 2004.

US consumer confidence is close to a 15-month high as gasoline prices decline and unemployment remains at its lowest in five years.

Online shopping on Friday totaled US$434 million, a 42 percent jump over last year, consulting firm ComScore Networks Inc. said. Consumers spent US$8.31 billion this month through Nov. 24, a 23 percent increase over last year, ComScore said.

The NRF said sales this month and next month may rise 5 percent to US$457.4 billion.

About 33 percent of shoppers bought electronics over the weekend, including flat-panel television sets, Microsoft Corp's Zune digital music player and video-game consoles such as Nintendo Co's Wii and Sony Corp's PlayStation 3, the NRF said.

Laura Brown, a 38-year-old nurse in Atlanta, bought a 42-inch Panasonic plasma TV for US$1,000 at a Best Buy Co store the day after Thanksgiving. The set was marked down from US$1,700 and was "my gift to me," Brown said.

"It was shocking because people were only buying doorbusters," said Davidowitz, chairman of Davidowitz & Associates. Employees with his New York-based consulting firm visited 50 retailers this weekend. "You can't have people just come in and buy doorbusters and leave." Wal-Mart said on Saturday that this month's sales at US stores open at least a year fell 0.1 percent, the worst performance in a decade and lower than the company's forecast of unchanged sales.

The retailer marked down toys, electronics and appliances while cutting prices on generic drugs in 38 US states.

"First Wal-Mart wanted to go upscale, now they're going back to cutting prices across the board," said Walter Todd, who helps manage US$850 million at Greenwood Capital in Greenwood, South Carolina. "I think things are a bit loosey-goosey right now." Todd sold Wal-Mart shares this year on concerns over slowing sales.

Walmart.com, Wal-Mart's Web site, was working intermittently on Black Friday because of unexpectedly high traffic, spokeswoman Amy Colella said. The company posted Black Friday specials online on Thanksgiving Day and ran advertisements during college football games to direct users to the site.

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