Retailers see 11th-hour surge in holiday sales

NEW YORK (CNNMoney) -- It may not be over yet, but retailers are breathing a sigh of relief and celebrating a successful holiday season, thanks to a last-minute surge in sales.

Online sales during the final week before Christmas hit $2.8 billion, up 16% from last year, according to ComScore, while mall shoppers spent about $44 billion in the week ending Dec. 24, a 14.8% increase over the same week in 2010, according to ShopperTrak, which tracks foot traffic at malls and stores.

Overall, retail sales rose 4.5% year-over-year, according to the International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index.

The reports are welcome news to retailers, which saw holiday sales bottom out in early December after notching new records for Black Friday weekend and Cyber Monday.

After the initial rush for doorbuster deals and other discounts, persistently high unemployment, the weak housing market, Europe's debt crisis and uncertainty about the economy weighed on shoppers, especially in the lower income brackets.

Holiday sales only picked up again right before Christmas, the ICSC report said -- helped in part by mild weather and an extra shopping day on Saturday, when many stores extended hours.

"Holiday shopping went down to the wire as consumers took advantage of the full shopping week ahead of Christmas Day, which fell on a Sunday this year," said Michael Niemira, ICSC's chief economist.

Overall shopping visits increased by 6.5% in the week ended Monday, Dec. 26, according to a separate report from the NPD Group Tuesday.

In addition, shoppers shelled out more during each trip to the mall. The average amount spent per visit was up 4.7% from the prior week, the largest week over week increase since the week of Nov. 28, which included Black Friday, NPD said.

By the final week of Christmas though, retailers had marked down their inventory significantly to entice shoppers to spend before the holiday's end.

"Retailers still had to incentivize shoppers to come out of their foxhole but they did show up," said Paul Ballew, chief economist at Nationwide in Columbus, Ohio.

But those markdowns could signal trouble ahead, noted Candace Corlett of WSL Strategic Retail, a New York-based consulting firm.

"Heavy discounts in the last days before Christmas are a signal companies are worried they'll be stuck with inventory that isn't moving off the shelves," she said.

All those half-off sales could also take a toll on margins, which were already narrower than they were a year ago because of the rising cost of goods and transportation, Niemira added.

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On the upside, shoppers were particularly enthusiastic about buying new and exclusive merchandise, which bodes well for consumer spending going forward, said Craig Johnson, president of Customer Growth Partners.

This year's hottest toy -- the LeapPad -- wasn't available at a discount in any store and was still sold out at most retailers, he said. In addition, notable store openings like a flagship Uniqlo on New York's 5th Avenue and soaring demand for limited-edition collections, demonstrated "real excitement in retail," he said.

Overall, holiday sales are expected to rise 3.8% this year to a record $469.1 billion, according to a recent projection by the National Retail Federation. While that estimate has been revised up from the trade organization's earlier tally, it is still lower than the 5.2% increase notched last year.

Still to come: Sales in the key post-Christmas week when shoppers hit the stores once again to redeem gift cards and take advantage of even steeper sales, which will play a big part in the season's overall performance.

The week got off to a very good start, according to one early report. Shoppers spent $7.1 billion on Dec. 26, making it the fourth biggest shopping day of the entire holiday season behind Black Friday, Dec. 23 and Dec. 17, ShopperTrak said. Foot traffic on that day jumped 25.9% over the same day last year.