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Retailers Suffer Dismal Christmas Sales

Friday, 26 Dec 2008 | 11:59 AM ET

Computer screens burned bright this season as shoppers avoided the mall and surfed the internet for Christmas bargains. E-commerce was one of the few bright spots in an otherwise dismal holiday.

markhillary

Shoppers shifted purchases online at the end of December which boosted overall e-commerce results. Still, overall e-commerce sales were in negative territory—down 2.3 percent. Sales above $300 were at a virtual standstill. (See related story: Amazon Claims Record Holiday Orders.)

It took massive discounts, longer store hours and promotional giveaways to even get shoppers to the mall this season. Still that last minute rush could not save stores from double-digit sales declines across virtually every category.

That weak spending through Christmas Eve brought overall holiday sales to levels unseen since the 1980s, according to cash and credit card data tracked by Mastercard Spending Pulse.

Total holiday sales excluding auto purchases were down negative 5.5 to 8 percent. Including gas and autos, purchases were down negative 2 to 4 percent. The results are well below the plus 2.2 percent forecast made by the National Retail Federation in September.

The high-end stores were hit the hardest according to initial tallies of cash and credit card purchases tracked by Mastercard Spending Pulse. Jewelry, handbags and other luxury items sat on shelves. Luxury results through December 24th were down minus 34.5 percent. Stripping out jewelry, sales dropped minus 21.2 percent.

When shoppers did splurge, they mainly spent in the $500 to $800 range. That does not bode well for already beleaguered stores Saks and Nordstrom which report their own results on January 8th.

Big ticket electronics purchases also tumbled this Christmas versus last. Sales there down minus 26.7 percent.

One of the most popular Christmas gifts continued to be clothing. Apparel results at specialty stores were down minus 19.7 percent. Men replaced women as clotheshorses this season. Women's clothing continued to sell in the same negative double-digit range throughout the season—down minus 22.7 percent—while menswear fared better—down minus 14.3 percent.

Now retailers' fortunes will be decided in the next six days of post-Christmas sales. Stores will continue to dangle discounts and flexible return policies as incentives for consumers to spend. How they buy will determine whether some stores have enough cash to survive through 2009.

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