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Modest gains in holiday shopping season

Shoppers headed to stores and malls Friday to hunt for post-Christmas bargains, as retailers sought to get rid of leftovers and recoup business in a season that will likely turn out to be only modestly better than a year ago for many merchants.
Shoppers Crowd Stores For After Christmas Bargains
Shoppers crowd the aisles of Century 21 department store the day after Christmas in New York City. Stephen Chernin / Getty Images
/ Source: The Associated Press

A late spending surge helped boost sales last week for many merchants, according to data released Monday, offering relief to retailers in a holiday season that is still projected to be only modestly better than a year ago.

Internet sales and consumer electronics were the winners, both rising strongly from a year ago, but sales at department stores and toy stores fell.

Unlike a year ago, when last-minute spending was insufficient to help retailers meet their holiday goals, this year's finale was strong enough to offset December's earlier weakness, according to Michael P. Niemira, chief economist and director of research at the International Council of Shopping Centers.

"I'm much more upbeat than I was a week ago," said Niemira, who also serves as a consultant at ShopperTrak, which will release on Tuesday data showing sales through this past Saturday. "The surge was late. but it was enough to save the season."

ShopperTrak tallies total sales at 30,000 retail outlets.

"The worry level was high, but sales came through -- but not evenly," Niemira said. He added that the day after Christmas, which starts the post-holiday sales, was much stronger than a year ago.

Biggest since 1999?
Niemira believes that overall same-store sales growth is on track to meet his forecast of 4 percent for the November-December period, reduced earlier in the season from 4.5 percent. That's on top of a meager 0.5 percent gain during holiday 2002 from the previous year.

Same-store sales growth, or sales at stores opened at least a year, are considered the best indicator of a retailer's health.

While modest -- given that stores hoped to benefit more from a recovering economy -- the expected gain will still be the biggest since 1999, when Niemira's tally posted a 5.4 percent increase.

Late Monday, Target Corp., which had been tracking same-store sales growth below projections for December, said that sales for the week ended Saturday beat expectations. That helped boost sales at its namesake discount division to the low end of forecasts for the month. For the overall corporation, which includes the Marshall Field's and Mervyn's stores, sales are still below projections.

The nation's retailers are slated to report final December same-store sales figures on Jan. 8.

On Monday, MasterCard Advisors, a unit of MasterCard International, said that total sales were up 6.5 percent from Nov. 28 through Dec. 24, compared with a year ago. The figures were adjusted to reflect the extra day this holiday season.

Internet and catalog sales rose 6.5 percent, MasterCard Advisors said, while consumer electronics and appliance store sales were up 6.7 percent. Sales at home furnishing stores increased 3.9 percent. But apparel stores were up only 1.65 percent, department store sales fell 1.4 percent and sales at toy stores declined 7.7 percent.

Visa USA said Monday that total U.S. spending on Visa debit and credit cards from Nov. 28 through Sunday increased 14.2 percent over the same period of 2002. The total amount spent on Visa cards during the holiday season reached nearly $100 billion.

'Solid' season
Phil Kowalczyk, managing director of the retail consulting group Kurt Salmon Associates, said he is still sticking to his forecast for total holiday sales, excluding restaurants, to be up 3.5 percent.

"This holiday season was solid, and it was better than last year, but it wasn't the euphoria people were expecting," he said. "Not everybody got gifts from Santa."

He estimated that stores likely sold anywhere from 4 percent to 5 percent more items than a year ago, but lower prices than last year on goods like DVD players and more planned promotions dampened overall sales revenue.

One major plus for the season is that profits are expected to be healthy because of lean inventories and the lack of across-the-board discounting that characterized last year's season, Kowalczyk said. Even as the season got more challenging, stores went ahead with another round of planned discounts, but they "weren't panic promotions," he said.

Online sales have been the big pleaser.

From Nov. 1 through Dec. 26, online sales reached $11.7 billion, an increase of 29 percent compared to a year ago, according to comScore Networks Inc. That's tracking at the high end of holiday projections. The Internet research company projects online retail spending to total between $12.1 billion and $12.6 billion, excluding travel and auctions, in November and December.

While it was no surprise that stocking stuffers and virtual presents like gift certificates did well, comScore also reported an unexpected late rise in furniture and appliance sales.

That showed an "increased use of buying online and picking up at the store," said Dan Hess, a vice president of comScore.