Retail-sales growth fell to 3.1% last week

December 06, 2006|By BLOOMBERG NEWS

NEW YORK -- Retail sales growth in the week after Thanksgiving fell to 3.1 percent, the slowest rate in four years, as consumers delayed holiday purchases to wait for discounts.

A longer shopping period between Thanksgiving and Christmas contributed to consumers' delays, the International Council of Shopping Centers (ICSC) and UBS Securities LLC said yesterday. Their survey showed that 25 percent of shoppers finished most of their purchases by Sunday, down from 32 percent the previous two years.

Sales growth at stores open at least a year declined from a 3.5 percent gain in 2005 and was the lowest since a 2 percent gain in 2002. With an extra shopping weekend this year, consumers are "procrastinating," said Dan Popowics, an analyst with Cincinnati-based Fifth Third Asset Management.

"Shoppers are savvy and realize that in some cases they can be rewarded for waiting," said Pop- owics, who helps manage $21 billion in assets. "The calendar needs to turn over a few more days before the season heats up a bit."

Retailers' November sales rose less than analysts estimated, and the International Council last week lowered its forecast for the holidays after Wal-Mart Stores Inc., the world's biggest retailer, forecast slowing growth. Last year, 32 percent of the retail industry's profit and 27 percent of sales were derived in the November-through-January period, the group said.

"I'd be surprised if you saw a boom from here on out or a bust," said Mike Niemira, ICSC chief economist. "I suspect that you will see a lot of the buying particularly in the last two weekends before Christmas."

Comparable-store sales in December are expected to increase 2.5 percent to 3.5 percent, Niemira said yesterday, up from his previous estimate of 2 percent to 3 percent.

The Johnson Redbook retail sales index was up 2.4 percent in the week that ended Saturday over a year ago because of inclement weather in the Midwest and consumers delaying holiday shopping "until the last minute," expecting discounts, Redbook said yesterday.

Sales for the week through Saturday fell 2.6 percent from the week earlier, the third decline in the past four weeks.

"Retailers are not being as promotional this year," said Arun Daniel, an analyst at ING Investments LLC in New York.

Daniel, who helps manage $40 billion in assets, said he expects shoppers to start spending more by the end of next week as retailers start discounting items such as apparel and home furnishings.

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