U.S. holiday retail sales rose a disappointing 3 percent from 2005 as a slowing housing market and higher energy costs cut into spending, MasterCard Advisors said Tuesday.
The gain is less than the 5.2 percent increase last year and is the weakest growth since the survey started in 2003, MasterCard Advisors said in a statement. Electronics and luxury goods had the strongest sales, according to the company’s SpendingPulse survey.
“Retailers are going to find that this was a pretty modest Christmas season,” said Britt Beemer, chairman of Charleston, S.C.- based America’s Research Group.
Holiday sales slowed this year because of increases in interest rates and gasoline and heating prices, said Michael McNamara, vice president of research at MasterCard Advisors. Warmer- than-normal weather in some regions of the U.S. hurt apparel sales, he said.
Retail sales climbed 23 percent on the weekend before Christmas as consumers hit the stores for last-minute shopping, and that may have helped push revenue to the 5 percent gain forecast for the season by the National Retail Federation. That would be the slowest pace since 2002.
Wal-Mart Stores Inc. will issue a preliminary report on this month’s sales Saturday. It has forecast a gain of up to 1 percent. Most other retailers will disclose sales for December on Jan. 4.
“In terms of real dollar spending, I think that we’ve got some problems,” said Richard Hastings, New York-based analyst with Smyth-Bernard Sands. “This year, unfortunately, I think Q4 earnings are going to be a problem.”
The S&P 500 Retailing Index dropped 1.55 to 497.12 Tuesday. It has fallen less than 1 percent since Oct. 31.
“The season came in a little softer than some expected,” said McNamara of MasterCard Advisors, a unit of Purchase, N.Y.- based MasterCard Inc. “As we are going into 2007, we don’t have the same consumer momentum as we did heading into 2006.”
The MasterCard data from the day after Thanksgiving to Christmas Eve are adjusted for an extra shopping day compared with last year. The data are based on sales using cash, checks and MasterCards. On an unadjusted basis, 2006 holiday retail sales rose 6.6 percent, a smaller gain than the 8.7 percent in 2005.
“This is the first year, and I’ve been doing this for 20 years, where there was no clear-cut category winner,” said Beemer.
The National Retail Federation has forecast that the average amount spent on gift cards by consumers will rise to $116.50 this holiday season from $88 last year.
“Certain sectors like department stores will be pulling out the stops for people to redeem gift cards and provide additional discounts to try to bolster sales that were otherwise relatively soft,” said Wayne Best, senior vice president of economic analysis for Visa USA.
