Holiday sales: Much worse than feared

Retail group says combined November-December sales fell 2.8%, after expecting a modest gain.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Parija B. Kavilanz, CNNMoney.com senior writer

chart_holiday_retail_sales_011409.jpg

NEW YORK (CNNMoney.com) -- The retail industry's leading trade group blamed a "deep recession, severe winter weather and five fewer shopping days" for a 2.8% drop in 2008 holiday sales - a far worse outcome than the industry expected.

The National Retail Federation had originally forecast holiday sales for the combined November-December shopping months to grow 2.2%, which would still have been the weakest pace of gain in at least six years.

As it was, it turned out to be the first-ever decline in the measure since the group initiated it in 1995.

The two-month holiday period can account for as much as 50% of retailers' annual profits and sales.

"The current economic crisis proved to be more challenging than any had anticipated," NRF Chief Economist Rosalind Wells said in a report. "Consumers showed they were more than willing to wait out retailers this year causing increased pressure on prices."

Also, the group said a shift in the calendar which resulted in five fewer shopping days between Thanksgiving and Christmas in 2008 versus the previous year meant consumers had fewer days to do their gift shopping and merchants had fewer days to log additional sales.

The latest government report on December retail sales, also released on Wednesday, supported Wells' point.

The Commerce Department report showed overall retail sales fell 2.8% last month and declined 3.1% excluding auto purchases, despite a last minute surge in holiday-related purchases in the week before Christmas.

December's sales drop marked the sixth straight monthly sales decline in 2008 and the longest consecutive stretch of monthly declines in the measure in at least four decades.

What's more, last year's ugly holiday sales could force an unraveling of the retailing industry, forcing several chains to go out of business in 2009.

Many retailers, including Circuit City, Linens 'n Things and Whitehall Jewelers already either filed for bankruptcy or liquidated last year. That trend is expected to rapidly pick up pace in the weeks and months ahead.

The latest casualty - regional department store chain Gottchalks, which operates 58 stores in six Western states - filed for bankruptcy Wednesday.

But analysts warn that given the credit market freeze, it's highly unlikely that any merchant who files for bankruptcy in this environment will come out alive. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
For sale: Steve McQueen's 1967 Ferrari The red 1967 sports car is expected to fetch millions at auction. More
The 13 most WTF gadgets From the weird to the gross, these 13 gadgets will make you wonder why they even exist. More
Best-loved cars in America These cars and trucks topped J.D. Power's APEAL survey, which measures how much owners like their new vehicles. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.