Bloomberg News

Retail Sales Climb 4.5% Week Before Christmas, ICSC Says

December 31, 2011

(Updates with holiday sales estimate in fifth paragraph.)

Dec. 28 (Bloomberg) -- Sales at U.S. retailers rose 4.5 percent last week from a year earlier, as shoppers snapped up last-minute purchases for Christmas and took advantage of some chains extending hours.

Sales for the week ending Dec. 24 increased 0.9 percent from the previous week, according to a chain-store sales index released today by New York-based International Council of Shopping Centers and Goldman Sachs Group Inc. That compared with a 3.4 percent gain a week earlier.

Retailers benefited from Christmas Eve falling on a Saturday, with Family Dollar Stores Inc., Toys “R” Us Inc. and Macy’s Inc. among chains extending hours to lure bargain-hunting shoppers. Unemployment at its lowest in more than two years and falling gasoline prices boosted consumer confidence to an eight- month high in December, prompting households to seek discounts during the holiday season.

“Retailers who gave deals found that consumers would spend,” Marshal Cohen, chief industry analyst at NPD Group in Port Washington, New York, said today in a telephone interview. “The holiday was better than expected. Consumers who were tired of living in this spending cocoon went out and bought what they needed and wanted.”

Retail sales may rise 3.8 percent this holiday season, compared with a 5.2 percent gain last year, according to the Washington-based National Retail Federation. The ICSC reiterated its forecast for December comparable-store sales to advance 3.5 percent to 4 percent.

Profit Margins

U.S. retailers kept stores open longer than ever throughout the holiday season. Almost all 600 Toys “R” Us U.S. locations remained open from Dec. 20 to Christmas Eve -- or 112 hours straight.

While the discounts may help move the merchandise, they also could squeeze profit margins, according to Poonam Goyal, a Bloomberg Industries analyst based in Princeton, New Jersey.

Black Friday discounts, including a 42-inch Sharp flat- panel television for $199.99 from Best Buy Co., drew crowds the weekend after Thanksgiving and kicked off a “solid, not gangbusters, holiday season,” Madison Riley, a retail strategist at consulting firm Kurt Salmon, said in an interview yesterday.

“December started slowly and built as it got closer to Christmas,” Riley said. “The final week was very strong, helped by that extra Saturday before Christmas.”

Gift-card redemption in coming weeks “could be stronger than in recent years,” Michael Niemira, ICSC’s chief economist, said in the statement.

--Editors: James Callan, Robin Ajello

To contact the reporters on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net; Ashley Lutz in New York at alutz8@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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