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Holiday Retail Sales Foundering

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By JOSEPH GALANTE, Bloomberg News

Published: December 21, 2007

Sales at U.S. retailers declined for the third straight week as storeowners grappled with winter storms and rising gasoline prices that discouraged shoppers during what may be the worst holiday season in five years.

Sales in the seven days through Saturday fell 0.4 percent from a year earlier, following declines of 2.7 percent and 4.4 percent the previous two weeks, Chicago-based ShopperTrak RCT Corp. said Thursday.

This year's holiday shopping season may grow at the slowest pace since 2002, according to the National Retail Federation. U.S. shoppers finished just 20 percent of their holiday gift buying last weekend, according to a joint survey conducted by the International Council of Shopping Centers and UBS Securities. Consumers may be holding out for lower prices in coming days, analysts said.

"The early read on the season was overly optimistic," said Fred Crawford, managing director for Southfield, Michigan-based consultant AlixPartners LLP. "It's going to be a very difficult 2008."
ShopperTrak forecast a 3.6 percent increase in holiday sales this year. The National Retail Federation in Washington said sales may rise 4 percent this November and December, slowest since 2002.

Home Depot, Macy's and Target have discounted prices by 50 percent to attract customers during the three months that account for about 30 percent of the industry's profit. With Christmas on a Tuesday this year, retailers are counting on a surge in buying this weekend from shoppers making last-minute purchases, analysts said.

In another measure of retailers' performance, the International Council of Shopping Centers in New York said this week that sales at stores open at least a year rose 2.1 percent last week, the slowest since October.

Almost two-thirds of consumers plan to complete shopping this weekend, the group said.

The average price of gasoline in the United States, $3 a gallon, has discouraged shoppers from driving to stores, sending some of them to the Internet.

Online sales, which may be the fastest-growing retail channel this November and December, rose 19 percent to $22.7 billion from Nov. 1 through Sunday, according to Reston, Va.-based ComScore Inc. That's less than the firm's forecast of 20 percent growth for those two months, which would be the smallest increase on record, and slower than last year's 26 percent gain.

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