U.S. Weekly Retail Sales Fall Most in Almost 6 Years
Dec. 30 (Bloomberg) -- U.S. retailers’ sales declined last week the most in almost six years as steeper markdowns before and after Christmas failed to salvage what may be the worst holiday shopping season in four decades.
Sales at stores open at least a year fell 1.8 percent in the seven days through Dec. 27, the International Council of Shopping Centers and Goldman Sachs Group Inc. said today in a statement. That’s the biggest year-over-year drop since February 2003. Holiday comparable-store sales may decline as much as 2 percent, according to the New York-based trade group.
Consumers spent at least 20 percent less on women’s clothing, electronics and jewelry in November and December, pressuring retailers including Macy’s Inc. and Talbots Inc. to mark down clothes and jewelry by as much as 70 percent after the holiday. That may further squeeze fourth-quarter profit margins.
“Fourth-quarter earnings for retailers will tank,” Richard Hastings, a consumer strategist at Global Hunter Securities LLC of Newport Beach, California, said in a telephone interview. “I don’t think we return to normal next year.”
December sales may drop at least 1 percent, with “only a few bright spots,” such as Wal-Mart Stores Inc., “amid double- digit declines among a broad swath of the industry,” ICSC Chief Economist Michael Niemira predicted. The trade group studies sales at about 40 chains.
Four Decades
The ICSC’s forecast last week of a same-store sales drop of as much as 2 percent in November and December is more than its previously projected decline of 1 percent. It would be the largest decrease since at least 1970, when the trade group started tracking shifts from the previous year.
The holiday shopping season accounts for as much as 35 percent of annual sales, according to the National Retail Federation industry group.
The Johnson Redbook Index, another measure of retail performance, fell 0.4 percent last week compared with a year earlier as a “last-minute Christmas rush” failed to counter sluggish pre-holiday sales and winter storms, New York-based Redbook Research Inc. said today in a statement. The report measures sales at about 9,000 stores.
Eric Beder, an analyst at Brean Murray Carret & Co. in New York, today reduced fourth-quarter and 2009 earnings estimates for retailers including J.Crew Group Inc., Coldwater Creek Inc. and Aeropostale Inc.
Inventory Discipline
“A rapidly declining economy, almost the smallest period of days between Thanksgiving and Christmas, terrible weather patterns and very aggressive discounting by retailers all combined to create one of the worst holiday seasons in recent memory,” Beder wrote in a research note. That “easily overwhelmed any inventory discipline retailers were able to exercise.”
The Standard & Poor’s 500 Retailing Index has shed 33 percent this year, with only three of its 27 companies rising.
The index doesn’t include Wal-Mart, the world’s largest retailer, which fell 6 cents to $55.05 as of 4:02 p.m. in New York Stock Exchange composite trading. Wal-Mart shares have gained 16 percent this year through today.
“Wal-Mart looks to have had the best holiday season as consumers sought out the best value,” Brian Nagel, a retail analyst at UBS, said yesterday in a Bloomberg Television interview. “Other than that, it was pretty weak.”
Gap Inc. and Macy’s are among retailers that plan to report December results on Jan. 8. Some investors consider comparable- store sales the best measure of results because they exclude the effect of location openings and closings in the past year.
