Christmas Eve Retail Post-Mortem

While we won’t get the full data for a few days, some early numbers are beginning to come in. The most chartable thing I can say about holiday sales is that it was mixed:

Retail Sales Fell for Fourth Week, ShopperTrak Says  — Sales at U.S. stores fell for the fourth straight week as rising fuel and food prices threatened to hand retailers their worst holiday shopping season in five years.

Spending fell 2.2% for the week through Dec. 22 from a year earlier, Chicago-based ShopperTrak RCT Corp. said in a statement today. A 7.6 percent increase on the Saturday before Christmas wasn’t enough to lift retailers’ revenue last week as shoppers grapple with $3-a-gallon gasoline and a deepening housing slump. This year’s holiday shopping season may grow at the slowest pace since 2002 as stores struggle to recapture the gains they saw on the Friday after Thanksgiving  (Bloomberg)   

Target Warns Same-Store Sales For December May Decline Target warned on Monday that December sales at stores open at least one year were running well below its previous forecast and may actually decline, jeopardizing earnings growth at the No. 2 U.S. retailer.

The warning, among the earliest assessments of holiday retail traffic, fuels fears that the U.S. consumer is starting to feel the pinch of a slower economy, higher prices and a much tighter credit market. After the market closed in a holiday-shortened session, Target (TGT) said that based on sales in the first three weeks of December and projected sales over the next two weeks, sales for the five weeks ending Jan. 5 would likely lie in a range of plus 1% to minus 1%. In early November, the company forecast same-store sales for the month of December would slump into the low single digit range, and on a calendar-adjusted basis same-store sales would rise 3% to 5%. (Marketwatch)

• Let’s take a closer look at those ShopperTrak survey numbers, released Monday afternoon: Weekend sales jumped 18.7% over a year ago. ShopperTrak had reported sluggish sales leading into the final weekend.

Why the big leap? BLAME THE CALENDAR, as Christmas Eve 2006 fell on a Sunday. THis year, shoppers had many more hours to hit the malls as compared to last year. (CNN)

• One clear shopping winner? Costco Notches ‘Pretty Good’ Holiday Sales, ‘Clean’ Inventories:  Costco Wholesale Corp. (COST) has registered "pretty good" holiday-season results so far and has largely avoided inventory gluts that would lead to markdowns, the retailer’s chief financial officer said."Generally speaking, our season went well," Costco CFO Richard Galanti said Monday in an interview. "We were left pretty clean in terms of seasonal markdowns. On the food and sundry side, items that were strong were high-end chocolate gift packs and high-end nut gifts packs. All of our seasonal gift packs sold through pretty well."He declined to divulge specific figures. (WSJ)

And as we noted in yesterday’s linkfest, Best Buy had a very good season, Lifting Outlook as Profit Jump Defies Retail Softness

Thats the mix of it: Tech/Gadgets and discounters did well, online continues to grow, but generally retail saw a constrained consumer.  Its hard to get away from the conclusion that this was at best a mediocre Christmas shopping season . . .

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What's been said:

Discussions found on the web:
  1. Eric Davis commented on Dec 24

    That was what I expected. Nothing out of dickens…. yet.

  2. Ian commented on Dec 24

    I was waiting for someone to make these past two posts. Any analysis of consumer spending shows it is lackluster and inflation is coming. Everyone expected RIMM to outperform. Financials are getting funds, but everyone expects more write-downs. So, why the bounce? Your posts help lead me to believe this is (1) a technical bounce and (2) traders piling on to a little good news to salvage the year. The question remaining is, what happens on Jan 1 or Jan 2?

  3. Bob A commented on Dec 24

    Happy Holidays

  4. ac commented on Dec 25

    As I commented 2 months ago, big durables got slammed. If you are in retail associated with them, it wasn’t a nice Christmas. Shows you how Christmas 2006 really couldn’t be called a ‘housing bust’ Christmas while 2007 was.

  5. donna commented on Dec 25

    We were at Target this afternoon and there was no devastation, no empty shelves, lots and lots of stuff everywhere.

    It was sad….

  6. Chief Tomahawk commented on Dec 25

    Well, I took in the annual Christmas Eve service tonight and the sermon was “The only thing we have to fear is fear itself.” What a way to ring in 2008. And no, I don’t know whether Ben Bernanke or Hank Paulsen was in attendance…

  7. halbhh commented on Dec 25

    Target, like JCP was presumably in that in-between place that was less good. But:

    “Meanwhile, Karen MacDonald, spokeswoman at Taubman Centers Inc., which operates 24 malls in 11 states, said the “entire weekend” was strong and the malls on Monday were busy from the time they opened. Based on a spot check of malls, stores are recording low-single digit sales increases this holiday season, she said, but they’re also looking to the week ahead when gift cards are redeemed.

    Jerry Storch, chairman and chief executive at Toys “R” Us Inc., said the weekend was very strong.”


  8. Richard commented on Dec 25

    the housing impact is only beginning to rear its ugly head. watch the next couple of years ahead as the holiday season starts to get progressively worse until we bottom out and flat line for a bit. the credit cycle must be scourged.

  9. blueherring commented on Dec 25

    i don’t know about you, but i think housing busts last about 5 years. The peak was 2005, right around the Katrina double top. All of 2006 was reorganization and a rush for the exits. 2007 was over before it started.

    So, for the next two years a march up to the prices of 2005…

    A slowdown in the growth of retail sales sounds just about right. Not too harsh, but easily construed either which way. Be cautious of everything looking like honey to a bear.

  10. halbhh commented on Dec 25

    blueherring, I agree re 5 years, and possibly longer. It’s reasonable as some project for housing to bottom by 2009, but I doubt it. Without serious Government intervention (such tradgedies do happen, sadly for everyone), median house prices will head down, down, down to somewhere in that more pleasant 2.5-2.8x median family income. With Government intervention, we could have something worse, like happened to Japan.

    Re retail sales though, I know enough to be skeptical of all the projections I’ve seen, of all flavors. I don’t think it’s to be predicted, so much as observed, though predictions are fun and will be plentiful and overabundant.

  11. Winston Munn commented on Dec 25

    While the market movement and associated explanations of how good or how bad holiday shopping turned out to be will be entertaining, the real test won’t come until later when we see the impact of discounting on earnings.

  12. newstraderfx commented on Dec 26

    The 2007 XMAS shopping season is going to be the last “hurrah” for consumer spending, at least thru Q1 2008. Falling home values, stagnant real wages and rising food and energy costs will likely lead to a real slowdown for the period.

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