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Holiday sales show meager 3.6% gain

December 26, 2007|From Reuters

NEW YORK — U.S. retailers' holiday sales rose 3.6% over the previous year, barely reaching the lower end of projections, helped by a late-season spending surge on some items, according to data released Tuesday by SpendingPulse.

The figures, from MasterCard Advisors' retail data service, offer a glimpse at the strength of the 2007 holiday shopping season, which was expected to grow at the slowest rate in five years, as U.S. consumers faced a housing slump, a credit crunch and higher prices for food and fuel.

"It's more at the lower end of the expected range but more or less in line with the reduced expectations coming into the holiday season," said Michael McNamara, vice president of Research and Analysis for MasterCard Advisors.

SpendingPulse had projected spending to rise 3.5% to 4% over last year. The figures include gasoline spending.

Economists and policymakers have been closely monitoring consumer spending, a sector increasingly seen as the savior that could keep the economy from slipping into a recession. Some analysts expect U.S. gross domestic product to weaken in the fourth quarter and show either no expansion or just a 1% gain.

SpendingPulse said sales at specialty apparel chains, which include Gap Inc., Aeropostale Inc. and Urban Outfitters Inc., rose 1.4% over last year, rallying from the anemic 0.5% seen at midseason.

The results measure the crucial shopping period from the Friday after Thanksgiving through midnight Dec. 24. They are adjusted for the 32 days included in this year's period compared with the 31 days in 2006.

Women's clothing sales fell 2.4%, but made up some ground late, having been down 5.7% at midseason.

Sales of men's clothing rose 2.3%, but had been up by 4.5% at midseason.

McNamara said there was no clear evidence that retailers cut prices more than they did last year.

Sales of consumer electronics -- which include popular gift items such as Apple Inc. iPods, laptop computers, flat-screen televisions -- and appliances rose 2.7%.

SpendingPulse tracks sales activity in the MasterCard Inc. payments network and combines it with estimates for all other payment forms.

Online shopping showed the greatest growth, up 22.4%.

Sales of luxury items, excluding jewelry, grew 7.1%. However, including jewelry, sales fell 1.9%. Footwear also did well, up 6%.

The results do not include post-Christmas spending activity, which has been growing with the popularity of gift cards.

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