[Marxism] WSJ: Retail Sales Plummet

Greg McDonald sabocat59 at mac.com
Fri Dec 26 05:45:04 MST 2008


  * DECEMBER 25, 2008, 10:35 P.M. ET

Retail Sales Plummet


Price-slashing failed to rescue a bleak holiday season for  
beleaguered retailers, as sales plunged across most categories on  
shrinking consumer spending, according to new data released Thursday.

Despite a flurry of last-minute shoppers lured by the deep discounts,  
total retail sales, excluding automobiles, fell over the year-earlier  
period by 5.5% in November and 8% in December through Christmas Eve,  
according to MasterCard Inc.'s SpendingPulse unit.

When gasoline sales are excluded, the fall in overall retail sales is  
more modest: a 2.5% drop in November and a 4% decline in December. A  
40% drop in gasoline prices over the year-earlier period contributed  
to the sharp decline in total sales.
[Retail sales chart]

But considering individual sectors, "This will go down as the one of  
the worst holiday sales seasons on record," said Mary Delk, a  
director in the retail practice at consulting firm Deloitte LLP.  
"Retailers went from 'Ho-ho' to 'Uh-oh' to 'Oh-no.'"

The holiday retail-sales decline was much worse than the already-dire  
picture painted by industry forecasts, which had predicted sales  
ranging from a 1% drop to a more optimistic increase of 2.2%.

Luxury goods, once considered immune from economic turmoil, were  
hardest hit, with sales falling 21.2%, compared with a jump of 7.5% a  
year ago, when the economy had just begun to sputter. Including  
jewelry sales, the luxury sector plunged by a whopping 34.5%.

During the same period last year, overall retail sales rose a modest  
2.4%, helped by late-season discounting that enticed procrastinating  
shoppers. But this year, after a moderate uptick in shopping activity  
boosted by steep promotions the Friday after Thanksgiving, shoppers  
closed their wallets and reopened them only cautiously, worried by  
job losses, a sinking stock market and a recession climbing into its  
second year.

"There has been a major contraction in consumer spending," Michael  
McNamara, vice president of research and analysis for MasterCard  
Advisors, said in an interview yesterday.

This spells a bitter disappointment for companies that had hoped the  
holidays would offset a year when sales have been sliding steadily,  
draining profits and, in many instances, undermining the ability to  
pay down debt. The industry already has seen a parade of retailers  
entering bankruptcy proceedings, such as Circuit City Stores Inc.,  
and liquidating, including Mervyn's LLC and Linens 'N Things Inc. The  
weak holiday sales mean more chains are likely to follow suit next year.
'The Buying Climate'

To be sure, there was a glimmer of positive economic news this week  
as well, as the Labor Department released figures showing inflation- 
adjusted consumer spending inched up slightly in November as gas  
prices fell steeply. The personal savings rate also climbed in  
November. Socking away more in the bank leaves less for splurging at  
the mall.

"It's all about restoring confidence in the buying climate and  
declining prices help to bring us there, but we're not there yet,"  
said Michael Niemira, chief economist at the International Council of  
Shopping Centers.

At a Los Angeles Anthropologie store on Christmas Eve, even a  
clearance table at the apparel and home-goods store didn't tempt  
Gloria Langstaff, 60 years old. "We're spending less," said the  
librarian from Missoula, Mont., who is visiting Los Angeles on an  
annual holiday trip. The trip itself was a cutback from last year,  
when the family went to the Dominican Republic.

A final burst of spending retailers hoped for last weekend never  
came. Shopper traffic fell 27% compared with the same time last year,  
while sales declined 5.3%, according to ShopperTrak RCT Corp., which  
tracks sales in retail outlets nationwide. Bad weather on both coasts  
combined with economic factors to slow sales, the company said.

Few retailers were counting on the holidays being robust when they  
placed conservative orders for merchandise last summer. Most worried  
that high gas prices and the continuing housing slump would cause  
another lackluster year. But even that conservative approach wasn't  
enough when the bottom fell out of the stock market in September. By  
October, retail sales were declining faster than expected amid the  
steady drumbeat of bad economic news.

No retail sector was spared. Among the biggest losers were  
electronics and appliances, which fell a combined 26.7% versus a 2.7%  
gain last year. Women's apparel slid 22.7% compared with a 2.4% drop  
a year ago. E-commerce showed the most resilience, with online sales  
falling just 2%. But it was still a disappointment compared with last  
year when online sales posted a 22.4% gain in the period.

FULL: < http://online.wsj.com/article/SB123025036865134309.html? 

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