RPT-US holiday sales view still weak after weekend rush

Sun Nov 30, 2008 1:30pm EST

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By Martinne Geller

NEW YORK Nov 30 (Reuters) - U.S. consumers sought bargains on toys, clothes and electronics as holiday shopping kicked off this weekend, but an early rush to stores was slower this year and was not likely to change a weak outlook for the season, analysts said on Sunday.

Early results from the Black Friday weekend, which begins one day after U.S. Thanksgiving, showed that sales grew both in stores and online.

Sales on Black Friday, which once marked the day retailers would turn a profit for the year, rose 3 percent to $10.6 billion, according to tracking firm ShopperTrak. That was slower than an 8.3 percent rise in 2007.

Online sales for that day rose 1 percent to $534 million, web tracking firm comScore said on Sunday.

"I don't believe that up 3 percent on Black Friday means we can look forward to up 3 percent for the rest of the season," said Michael Unger, principal in the retail practice at Archstone Consulting. "I think we'll see a lot of aggressive discounting in the last two weeks."

Unger noted that ShopperTrak's data measures customer traffic, which was likely boosted by stores offering heavy discounts known to sap profit margins.

Richard Hastings, a consumer strategist with Global Hunter Securities LLC, said Wall Street may take the weekend's sales growth as a positive sign that consumers are still spending.

"The bear market rally may see (the weekend's data) as supportive of some stability in the consumer, but we believe that is not the case," Hastings said.

Hastings still expects total retail sales over the holiday period of November, December and January to fall 6 percent to 8 percent from last year. That would mark the first contraction in holiday spending since the National Retail Federation began tracking such sales in 1992.

The NRF is due to release additional holiday shopping data later on Sunday.

CONSUMER APPETITE

U.S. stores are facing what could be the weakest sales season in nearly two decades as shoppers contend with falling home values, reduced access to credit and a weak job market.

Holiday shopping can account for up to 40 percent of a retailer's annual revenue.

Discounter Wal-Mart Stores Inc (WMT.N) has drawn more shoppers in recent months who are looking for lower prices in a shrinking U.S. economy.

Department store chains like Macy's (M.N) and Kohl's (KSS.N), as well as luxury retailers like Saks Inc SKS.N, have struggled with profits as shoppers cut back on nonessential purchases.

Shoppers interviewed over the weekend said they were disappointed by the deals and bet stores would offer even steeper discounts in the weeks to come.

"I'm not happy with the prices," said Rose Fernandez, shopping at a Macy's (M.N) in Jersey City, New Jersey. "If it's worth the money, I would pick it up ... If I can wait, I wait and watch. I can wait even till the day after Christmas."

Many shoppers said they were trimming their gift lists for the holiday, buying only for children in the family or finding other ways to celebrate with friends.

"I told my friends not to expect much and they said the same to me," said Claudia Thompson, a recent college graduate. "For my friends, we are planning a Christmas dinner where I buy dinner, someone buys the dessert and someone else buys movie tickets. That's how we will celebrate."

ShopperTrak noted that stores would have a shorter holiday season this year, with 27 days between Thanksgiving and Christmas, compared with 32 days in 2007.

"(That) may catch some procrastinating consumers off guard, leading to lower sales levels," said Bill Martin, co-founder of ShopperTrak.

In a highly competitive battle to attract shoppers, some retailers, including Kmart, opened on Thanksgiving day, while others began sales on Friday right after midnight. (Reporting by Martinne Geller; Additional reporting by Aarthi Sivaraman and Nicole Maestri; Editing by Bernard Orr)

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