U.S. Retail Sales Rise on First Holiday Weekend

Nov. 29 (Bloomberg) -- Sales at U.S. retailers climbed at the start of the holiday season, preliminary tallies from Thanksgiving weekend showed. Wal-Mart Stores Inc., the largest merchant, reported disappointing November sales and its shares fell.

Retail transactions using credit cards rose 6.1 percent in the two days after Thanksgiving from a year earlier, Visa USA said. Malls had higher traffic on "Black Friday," the traditional start of the holiday shopping season, and U.S. Web sales for the day increased by 40 percent according to researcher ComScore Networks.

Optimism over the sales gains was damped by Wal-Mart, which said customer traffic declined at week's end. The Bentonville, Arkansas-based chain said November sales at U.S. stores open at least a year rose 0.7 percent, less than its forecast for growth of 2 percent to 4 percent.

"We're going to have a good holiday season but I do think we're going to have the tale of two consumers," said Deloitte & Touche USA Vice Chairman Tara Weiner in an interview in New York. "High oil and gas prices, health-care costs are weighing heavy on the lower-income consumer's budget."

The Standard & Poor's 500 Retailing Index, which had gained 27 percent since hitting a low Aug. 6, declined 1.3 percent to 455.31 at 12:55 p.m. Shares of Wal-Mart, based in Bentonville, Arkansas, fell $2, or 3.6 percent, to $53.32 in New York Stock Exchange composite trading, their biggest decline in a year. Before today they had gained 4.3 percent this year.

Visa said sales using both its credit and debit cards rose 9.6 percent Nov. 26 and 27 to $3.78 billion. MasterCard International, the No. 2 card company, said transactions increased 9.3 percent and didn't provide dollar amounts.

General Growth Properties Inc., the No. 2 U.S. shopping mall owner, said weekend sales were rising from last year's levels.

Malls

"The retailers that have been strong are going to have a great holiday season," General Growth Senior Vice President Wally Brewster said in an interview from Chicago. "Fortunately that's the majority."

Taubman Centers Inc., which owns or manages 22 regional shopping centers, said valet parking increased at least 10 percent at its malls in Short Hills, New Jersey, and Schaumberg, Illinois. Apple Computer Inc.'s iPod music player and sweaters were selling well.

Scott Stuart, 29, a mortgage analyst at NationOne Mortgage Services in Columbus, Ohio, shopped at a Neiman Marcus store in McLean, Virginia, on Friday. He said he was spending more this year, as much as $500, because of a recent job promotion.

Comparable sales will rise 3 percent to 4 percent during November and December after increasing 4 percent last year, according to a forecast by the International Council of Shopping Centers, an industry group that tracks results at about 75 chains. Retailers get about a quarter of their revenue during this period.

Looking for Discounts

The credit "card sales are spectacular," Burt Flickinger, managing director of the Strategic Resource Group in New York, said on Bloomberg TV. "This will lead to the best holiday shopping season in U.S. history."

Retailers kicked off the season Friday with predawn store openings and discounts that included $18 DVD players at Best Buy Co. and $10 Bratz dolls at Toys "R" Us Inc.

Chicago shopper Adrian Moore, 36, said he was shopping a variety of stores ranging from Nordstrom Inc., where he was looking at a $228 Kristen Blake coat for his wife, to Sears, Roebuck & Co., where a $60 cordless drill was marked down to $19. He said he also shops discounters.

"It depends on who has the best deals," said Moore, an executive director of a social services agency who works a second job as a limousine driver. "The economy has been tough."

Tough Economy

Wal-Mart said it took a "more balanced" approach to discounts on the day after Thanksgiving, the start of the holiday shopping season. Store traffic declined at the week's end, the retailer said Nov. 27. Retailers trimmed inventories and limited promotions to protect their margins, analysts said.

Wal-Mart's November results mark the second time in four months that sales have risen less than 1 percent.

Gas prices are "going to affect discount customers the most," Scott Krugman, spokesman for the National Retail Federation in Washington, said in an interview on Bloomberg TV. "It is not a surprise that discounters are going to have a little bit of a unique challenge this holiday season. Retail as a whole can do well mostly because of the luxury market."

Cheryl Giddens, 50, got to the Wal-Mart store in Stone Mountain, Georgia, at 5:40 a.m. Friday to buy a $39 DVD/CD combination player.

Internet Sales

She said she plans to spend less this holiday season than last -- no more than $500 -- "simply because of the economy and just because I spent so much last year. I went way overboard."

Consumers spent $22.8 billion during the four-day weekend, according to the National Retail Federation, a Washington-based industry group that before Thanksgiving predicted sales in the two- month shopping season will rise 4.5 percent to $219.9 billion.

Consumers "have been willing to keep spending," Jack Caffrey, equity strategist at J.P. Morgan Private Bank, said on Bloomberg TV. "That's good news."

Web sales doubled to $133 million on Thursday, Thanksgiving, from a year earlier and surged 40 percent to $250 million on Friday, according to Reston, Virginia-based ComScore Networks.

Chuck Davis, president of Shopzilla Inc., a Los Angeles- based operator of a site where shoppers compare prices, said more people with faster Web connections at their homes helped spur the increase, as did consumers wanting to avoid crowds.

"At a time when gasoline and traffic are at record levels, the convenience of online saves time, which is priceless," said Davis in an interview. "Our Shopzilla sales shot up very heavily on Friday and Saturday."

December Sales

Gains on the day after Thanksgiving don't always presage increases throughout the season, said Michael Niemira, ICSC chief economist. Factors including weather, inventory, discounting patterns, and general economic conditions also come into play, he said.

The average price for a gallon of unleaded gasoline was $1.95, or 29 percent higher than a year earlier, according to the most recent weekly Department of Energy report. Natural gas for delivery in December was about 49 percent higher today than a year earlier on the New York Mercantile Exchange.

Retailers in past years have experienced a lull in sales after the Thanksgiving weekend until mid- to late December when stores are packed with shoppers rushing to pick out gifts.

If this year's pattern is similar to 1999, the last year when Christmas fell on a Saturday, eight of the top 10 selling days will occur between Dec. 17 and 24.