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Bleak holiday data for US retailers

BLOOMBERG

Cutbacks on clothing, electronics and jewelry led US retail sales to drop as much as 4 percent this holiday season as consumers limited purchases to necessities, SpendingPulse data showed.

Spending was the lowest since MasterCard Advisors started tracking data in 2002 to provide the SpendingPulse service, said Michael McNamara, vice president of research and analysis, in an interview on Thursday. He estimates sales, excluding autos and gasoline, fell 2 percent to 4 percent from Nov. 1 to Wednesday.

“Overall this has been one of the most challenging holiday seasons on record,” McNamara said.

Consumers facing a recession, tightening credit and the highest unemployment rate in 15 years shortened their gift lists and spent less. Retailers including Macy’s Inc and AnnTaylor Stores Corp responded by increasing markdowns, which stand to hurt profit margins in what may be the weakest holiday spending season in four decades.

The SpendingPulse figures follow forecasts of falling sales from industry groups. Sales at stores open at least a year may drop as much as 2 percent last month and this month, the International Council of Shopping Centers said on Tuesday, more than the previously projected 1 percent decline.

The drop puts pressure on retailers to attract shoppers with after-Christmas sales that started yesterday.

“The Friday after Christmas, with the discounts we’re hearing about, is going to be like another Black Friday,” said Scott Krugman, a spokesman for the National Retail Federation, a Washington-based trade group, said in a Bloomberg Television interview on Wednesday. “The week after Christmas is going to be more crucial for retailers than ever.”

The Standard & Poor’s 500 Retailing Index has shed 34 percent this year, with only two of its 27 companies gaining.

The index doesn’t include Wal-Mart Stores Inc, the world’s largest retailer, which rose US$0.15 to US$55.44 on Wednesday in New York Stock Exchange composite trading. Wal-Mart shares have gained 17 percent this year.

The SpendingPulse data service calculates its sales estimates based on MasterCard Inc network transactions and adjusts for cash, checks and other payment forms. MasterCard is the world’s second-biggest credit-card company.

From Nov. 1 through Wednesday, women’s clothing sales dropped 23 percent and men’s fell 14 percent, SpendingPulse said.

Combined electronics and appliance sales tumbled 27 percent, with purchases more than US$1,000 suffering the most, SpendingPulse data showed. Luxury sales, including jewelry, plunged 35 percent, the data showed.

Purchases over the Internet fared better, with a 2.3 percent decline. E-commerce may have been helped by inclement weather at the end of the holiday shopping season, McNamara said. Historically Web sales have posted 15 percent to 20 percent year- over-year sales gains.

The US economy shrank in the third quarter at a 0.5 percent annual pace, the worst since 2001, the US Commerce Department said. Consumer spending fell the most in almost three decades and forecasters project an even deeper slump in the final three months of this year.

Also See: Aussies beat the gloom in Boxing Day bargain hunt

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