That said, because of the souring economy I am not surprised by reports of Lackluster Holiday Sales
The 2012 holiday season may have been the worst for retailers since the financial crisis, with sales growth far below expectations, forcing many to offer massive post-Christmas discounts in hopes of shedding excess inventory.
While chains like Wal-Mart Stores Inc and Gap Inc are thought to have done well, analysts expect much less from the likes of Barnes & Noble Inc and J. C. Penney Co.
The latest sign of trouble came from MasterCard Advisors Spending Pulse, which reported holiday-related sales rose 0.7 percent from October 28 through December 24, compared with a 2 percent increase last year.
The estimates are still preliminary and focus on sales, not profits. A handful of retailers will post sales data next week, but most, including heavyweights like Wal-Mart, will not report results at the register until they release financial results in mid-February.
Analysts and industry groups already expected sales to grow at a slower pace than in 2011 and 2010. The National Retail Federation predicted 4.l percent sales growth, versus a 5.6 percent increase a year earlier.
But growth of less than 1 percent is weaker than even some of the most pessimistic forecasts.
One concern for retailers is that weak sales will mean an excess of inventory that will force some to slash prices.
Among other brands, Barnes & Noble offered 50 percent discounts in stores via email promotions on Wednesday, while Ann Inc had half-off at its Loft stores, and Bloomingdale’s promoted discounts of up to 75 percent in some cases.
“Retailers are no longer chasing sales, they are chasing inventory management. That means the discounts that they would have liked to be at 50-60 (percent) off have climbed to 75 to even 80 (percent) off,” said Marshall Cohen, chief industry analyst at The NPD Group.
Erica Ayala, 31, a mother of four who lives in New York’s Harlem neighborhood, waited until the day after Christmas to shop for that very reason, saving more than $150 on kids’ clothes alone at Gap’s Old Navy chain.
“You can’t go wrong with that,” she said.
Live Well Within Your Means
You can never go wrong by living well within your means.
And with the unemployment rate massively understating the true state of affairs, “within your means” is a lot lower than the predicted 4.1% growth right after Thanksgiving.
Indeed, I suspect sales growth would have been negative if everyone shopped in a common-sense manner, ignoring the Fiscal Cliff Jackasses who wanted everyone to spend more and blamed Congress for the poor holiday sales.
My comment on Saturday still stands…
As far as I am concerned, people spending less for Christmas is a side “benefit” of the fiscal cliff. The Government needs to tighten its budget and consumers do as well.
Consumers cutting back spending is a good thing. In the next set of retail reports, we will get a better idea how much consumers really cut back.
Mike “Mish” Shedlock
You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday I do a podcast on HoweStreet and on an ad hoc basis contribute to many other sites.
When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.