From the WSJ:
Spurred by heavy discounting, U.S. shoppers spent furiously in the days just before Christmas. But holiday retail sales appeared to still fall short of industry expectations, setting the stage for bigger markdowns in the increasingly important post-Christmas period.
The 11th-hour rush helped strengthen a weak holiday season. From the day after Thanksgiving to midnight Monday, total retail sales, excluding automobiles, rose 3.6% over the previous year, according to MasterCard SpendingPulse, a unit of MasterCard Advisors. But factoring out spending on gasoline -- which soared thanks to a 27% average price increase since this time last year -- retail sales increased a lackluster 2.4%. Industry forecasts had predicted gains of 3.5% to as high as 4.5
"The surge at the beginning of the season and the surge at the end of the season definitely resulted in the modest growth that we saw," Michael McNamara, vice president of research and analysis for MasterCard Advisors, said in an interview yesterday. "If we didn't have those surges, it would have been a negative story."
Last-minute purchases during the pre-Christmas weekend failed to salvage what may be the slowest holiday spending season in five years.
MasterCard Inc.'s consulting unit said yesterday that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 dropped 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the weekend, Chicago-based ShopperTrak RCT Corp. said earlier this week.
Target Corp., the second-biggest U.S. discounter, said Dec. 24 that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving. Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation.
The late buying surge over the weekend is ``not going to overcome the negative forecasts,'' Frederick Crawford, managing director at Southfield, Michigan-based AlixPartners LLP, said in a Bloomberg Television interview. ``It's going to be a good start, a very weak midsection, and a strong finish. But those two barbells at the end are not going to be able to overcome these last three weeks, which have been very weak.''
It looks like sales increased, but not by as much as people wanted. In addition, there are serious questions about the impact of all the discounting on retailers bottom lines. While we'll have to wait until the next earnings season to find out, I don't think it's going to be good news.