Holiday Retail Sales Up 3.8%

Retailers Made Over $600 Billion

Retail Holiday SalesU.S. retail sales increased by 3.8% this holiday season, a top research group said this week, an improved but still unremarkable performance that could hurt revenue forecasts for top retailers. The National Retail Federation announced that retailers took in $601.8 billion during the holidays, falling just shy of the organization’s forecast of 3.9% for the season. The total is an increase over last year’s 3.5% growth for holiday sales.

A number of reasons were cited for the so-so results. The holiday shopping season for 2013 was six days shorter than the year before, compressing shopping time and moving retailers to offer earlier Black Friday sales. Heavy discounting among retailers also cut into profits. Data firm ShopperTrak showed in-store traffic fell sharply by 14.6% this season. A recent pessimistic note from Morgan Stanley analysts said that the 2013 holiday period is “turning out worse than any since 2008,” adding a slowdown in the first half of the holiday season “proved too deep to recover from.”

Several top retailers have issued negative forecasts that have hurt stock prices and driven away investors. Teen-oriented stores fared the worst, with disappointing reports from American Eagle, Zumiez, Buckle and others. Key retailer, Target, suffered through a weak December after news broke that customer credit cards were possibly compromised by hackers. American Apparel (asi/35297), which sells in both retail and wholesale channels, reported sales in stores open at least one year slipped 6% in December year-over-year.

The retail market accounts for more than 4% of promotional product spending, according to Counselor State of the Industry research.