Holiday Sales in U.S. Fell as Much as 4%, SpendingPulse Says

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Dec. 25 (Bloomberg) -- U.S. retail sales fell as much as 4 percent this holiday season as consumers limited purchases to necessities and cut back on clothing, electronics and jewelry, according to SpendingPulse.

Spending figures are the lowest since MasterCard Advisors started tracking data in 2002 to provide the SpendingPulse service, said Michael McNamara, vice president of research and analysis. He estimates sales, excluding autos and gasoline, fell 2 percent to 4 percent from Nov. 1 through yesterday.

Consumers facing a recession, tightening credit and the highest unemployment rate in 15 years shortened their gift lists and spent less. Retailers including Macy’s Inc. and AnnTaylor Stores Corp. responded by increasing markdowns, which stand to hurt profit margins in what may be the weakest holiday season in four decades.

“Overall this has been one of the most challenging holiday seasons on record,” McNamara said today in an interview.

The SpendingPulse figures follow forecasts of falling sales from other industry groups. Sales at stores open at least a year may drop as much as 2 percent in November and December, the International Council of Shopping Centers said on Dec. 23, more than the previously projected 1 percent decline.

Apparel, Luxury

From Nov. 1 through Dec. 24, women’s clothing sales dropped 23 percent and men’s fell 14 percent, according to SpendingPulse.

Combined electronics and appliance sales tumbled 27 percent, with purchases over $1,000 suffering the most, according to SpendingPulse data. Luxury sales, including jewelry, plunged 35 percent, the data showed.

Purchases over the Internet fared better, with a 2.3 percent decline. E-commerce may have been helped by inclement weather at the end of the holiday shopping season, McNamara said. Historically Web sales have posted 15 percent to 20 percent year- over-year sales gains.

The SpendingPulse data service calculates its sales estimates based on MasterCard Inc. network transactions and adjusts for cash, checks and other payment forms. MasterCard is the world’s second-biggest credit-card company.

Deeper Recession

The U.S. economy shrank in the third quarter at a 0.5 percent annual pace, the worst since 2001, according to the Commerce Department. Consumer spending fell the most in almost three decades and forecasters project an even deeper slump in the final three months of this year. Jobless claims rose yesterday to a 26-year high.

Retail sales declined 5.3 percent Dec. 19 to 21 because of inclement weather and a slowing U.S. economy, Chicago-based research firm ShopperTrak RCT Corp. said yesterday in a statement.

“It’s a terribly challenging environment for retailers,” Scott Krugman, a spokesman for the National Retail Federation, a Washington-based trade group, said in a Dec. 24 Bloomberg Television interview. “The week after Christmas is going to be more crucial for retailers than ever. The Friday after Christmas, with the discounts we’re hearing about, is going to be like another Black Friday.”

The Standard & Poor’s 500 Retailing Index has shed 34 percent this year, with only two of its 27 companies gaining.

The index doesn’t include Wal-Mart Stores Inc., the world’s largest retailer, which rose 15 cents to $55.44 yesterday in New York Stock Exchange composite trading. Wal-Mart shares have gained 17 percent this year.

The U.S. stock market was closed today for the Christmas holiday.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.