Holiday Sales Outlook Brightens
by Doug Desjardins
Retailers received some unexpected good news heading into the final week of the holiday shopping season when the U.S Commerce Department reported a 1.3 percent increase in November retail sales, one of the largest increases of the year. Sales for the month were expected to be flat or rise 0.4 percent at best. 
The Dec. 11 report came one day before Reuters and the University of Michigan reported a jump in its Consumer Sentiment Index survey, which rose to 73.4 in the first week of December, compared to 67.4 in November. And the National Retail Federation (NRF) reported that Black Friday sales jumped 0.5 percent to $41.2 billion, compared to $41 billion in 2008, keeping in line with expectations. While these numbers are far from spectacular - a 73.4 consumer sentiment reading is well below average and a 1.2 and 0.5 percent increase in sales is negligible - any good news is welcome. "Retailers are encouraged to see momentum building in sales as they prepare for the final days before Christmas," said NRF economist Rosalind Wells.
While the NRF is sticking to its forecast that holiday sales will decrease 1 percent this year, at least one analyst has revised his forecast. Retail analyst Britt Beemer said he now expects sales to decrease only 1.2 percent for the holidays instead of the 2.9-percent drop he had forecast in November. Beemer bases his new forecast on sales of electronics and flat-panel TVs, which he said are "flying out the door" so far this year. His research shows that 30 percent of Americans plan to buy at least one gift in electronics this year, making it second only to toys (30.8 percent).
But the increase in November sales hasn't been across the board as some categories continue to struggle. One of the worst performers last month was video games, with the NPD Group reporting a 7.5 percent decline in November sales despite the debut of big sellers like Modern Warfare 2. The game industry generated $2.7 billion in sales for the month compared to $2.9 billion last year and sales are down 12 percent the first 11 months of the year.
Apparel sales also continued to decline. The Children's Place reported a 13 percent drop in November sales and Abercrombie & Fitch posted a 17 percent decline. Even lower-priced retailer America Eagle reported a 2 percent decline in sales for the month.
On the positive side, Best Buy reported that November same-store sales increased 8.4 percent on the strength of TV and laptop computer sales. Best Buy CEO Mike Dunn called the results "phenomenal" and said it was "certainly a sign of recovery for the consumer electronics computing industry." And though Toys "R" Us did not report November sales, it's reaping the benefits of strong sales of Zhu Zhu Pets, the robotic toy hamster that has become the "must-have" toy of the season.
Resources
Retail Sales Leap 1.3% in November
Analyst Raises Expectations for Holiday Sales
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One Response to “Holiday Sales Outlook Brightens”
Sales seem to be surprisingly good this Christmas. The recession wasn't as bad as predicted in country, the job losses were less than half that predicted.