US Retailers Unveil Dismal Holiday Season Sales

14 January 2008

NEW YORK: US consumers, shaken by the subprime mortgage crisis and rising fuel costs, kept their wallets firmly closed during the holiday season and delivered a blow to retail figures.

Disappointing numbers reported by the International Council of Shopping Centers showed same-store sales growth rose 2.2% for November and December combined, the slowest growth since 2002.

Macy's, the largest US department store chain, posted a 1.1% fall over the two months, despite extending its opening hours.

Ceo Terry Lundgren blamed "macroeconomic trends" which "led customers to spend cautiously for the holiday".

Discount retailer Target reported a tiny 0.6% increase in sales, while the nation's biggest retailer Wal-Mart delivered a 2.4% in December sales, beating analysts' expectations of a rise of 2.1 per cent.

However, intense price cutting may take the shine off profits.

Comments Ken Perkins, president of research firm Retail Metrics: "Consumers clearly tightened purse strings this holiday season, feeling the squeeze."

The data has fuelled fears in some quarters of a full-blown recession but the latest jobless figures may bring a crumb of comfort.

The Labor Department says the number of workers applying for unemployment aid fell unexpectedly by 15,000 in the first week of January.

Initial jobless claims fell to a seasonally adjusted 322,000 in the week ended January 5, from a slightly revised 337,000 the prior week.

The number of people who remain on the benefit rolls after drawing an initial week of aid dropped by 52,000 to 2.7 million in the week ended December 29, the latest period these figures were available.

Declares Joseph Brusuelas, US chief economist at financial consultancy IDEA global: "A move above 3 million is consistent with past recessions and the market will continue to monitor this data closely, as the traditional seasonal volatility works its way out of the series."

Data sourced from Financial Times Online and; additional content by WARC staff