December Goes Out With a Whimper

New York — In a limp and disappointing finish to the all-important Christmas selling season, when many retailers aim to record the lion's share of a year's profits, same-store retail sales inched up 2.6 percent during the fifth and final week of December, the Johnson Redbook Index reported.

Sales slowed substantially following a 4.5 percent increase the preceding week, coming in beneath plan and putting a damper on results for the entire month, said Redbook Analyst Catlin Levis.

For the month of December, sales rose by 3.4 percent over year-before levels, missing the target of a 3.8-percent increase. Measured against the previous month, sales were down 0.2 percent from November's level, shy of a targeted gain of 0.1 percent. “Sales performance pulled back in the final week of December compared to the previous week and ended the month below plan,” said Levis.

In some respects activity had seemed stronger. “The day -fter-Christmas traffic counts were relatively high as consumers were drawn into stores to exchange and return gifts, redeem gift cards and hunt for bargains.” Moreover, Levis said, “There were reports of significant upside performance at some department stores, which tend to be more promotional than discount stores at this time of year.”

But it wasn't enough, she noted. “Overall sales didn't sustain high levels during the middle of the week. Hanukkah began at sundown on Sunday and stores closed Sunday for Christmas. Many shoppers held on to their gift cards for later use. Meanwhile, heavy rain, floods and mudslides kept people home in parts of the West Coast, while the Southeast was the best performing region.”

Looking ahead to the start of 2006, Levis said, “Our preliminary target for the Johnson Redbook Index in January is 3.6 percent year-over-year growth, which would result in flat month-to-month growth against December.”

“The Christmas week provided the type of sales gains many retailers had been waiting for to bring the month more into line with expectations,” said Levis. But not all retailers, she noted, “shared in the good fortune.”

Helped by aggressive price promotions, she said, “certain retailers reported stellar gains and found themselves back on plan or close to it following several weeks of sub-target activity. Retailers said most of the business was done on Friday, the 23rd, and suggested that consumers had not used the 'extra' pre-Christmas shopping day to pack in more shopping, which retailers had been counting on.”

Gift cards continue to grow in importance, said Levis.