Discounts, promotions spur sales in U.S. holiday season

Thu Dec 26, 2013 6:08pm EST

A man plays a violin in front of a shop window decorated with Christmas sales signs in Prague December 24, 2013. REUTERS/David W Cerny

A man plays a violin in front of a shop window decorated with Christmas sales signs in Prague December 24, 2013.

Credit: Reuters/David W Cerny

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(Reuters) - Sales during the 2013 U.S. holiday season grew from a year earlier as deep discounting and increased promotions encouraged consumers to buy more.

Holiday sales between November 1 and December 24 rose 2.3 percent, compared with 0.7 percent a year earlier, according to data published in the MasterCard Advisors' SpendingPulse report.

This sales growth was the highest in three years.

"It was actually a Merry Christmas for retailers," Sarah Quinlan, senior vice president at MasterCard Advisors, told Reuters, adding that jewelry was the best-performing category.

SpendingPulse tracks customer spending on apparel, electronics, jewelry, luxury and home furniture & furnishings categories during the holiday season.

Shares of J.C. Penney Inc closed up 2.5 percent, while Wal-Mart Stores Inc finished 0.5 percent higher and Target Corp rose 1.2 percent.

Analysts have called the 2013 holiday season the most competitive since the recession in 2008, as many Americans battle stagnant wages, higher taxes and the impact from the government shutdown.

Retailers have slashed prices and used other promotions to lure customers in a season that typically generates 30 percent of sales and 40 percent of profits.

Even though the 2013 holiday season had six fewer shopping days between Thanksgiving and Christmas, as well as bad weather that affected sales in some parts of the country, holiday sales were a clear improvement on 2012 numbers, Quinlan said.

Last year's sales were hurt by Superstorm Sandy and rising concerns about the "fiscal cliff."

Total 2013 holiday spending rose 3.5 percent, MasterCard Advisors said.

Consumers spent more on jewelry and on children's clothing, while they held back spending on electronics and luxury items, SpendingPulse data showed.

According to comScore, online sales in the period between November 2 and December 23 grew 10 percent compared with a year earlier, but were short of the data firm's expectations.

A high volume of holiday packages overwhelmed shipping and logistics company UPS delaying the arrival of Christmas presents around the globe.

Amazon.com said the entire 2013 holiday season was the best ever for the online retailer, with more than 36.8 million items ordered worldwide on Cyber Monday, the Monday after Black Friday.

It also said that its annual membership program, called Amazon Prime, which offers free two-day shipping on items, clocked more than 1 million new members in the third week of December.

HOLIDAY SHOPPING TO CONTINUE

U.S. consumers shopped less on the final weekend before Christmas despite deeper discounts, signaling they will do more of their spending after December 25 than they did in the same period last year.

"We are not close to being done with the shopping season, there is a lot of innings left to play in the game," said Charles O'Shea, senior analyst at Moody's Investors Service.

Analytics firm RetailNext estimated that U.S. retail sales fell at brick-and-mortar stores over the weekend. That does not include online sales.

Analysts at NPD Group said on Tuesday that a slower-than-expected pre-Christmas holiday weekend would bring bigger-than-expected post-holiday discounts, where retailers will be "in inventory management mode rather than sales growth mode."

Quinlan and O'Shea both expect specialty apparel to see an increase in discounts due to their lackluster sales earlier in the season. Electronics items could see a slight rise in discounting, they said.

(Editing by Sriraj Kalluvila, Maju Samuel and Tim Dobbyn)

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Comments (9)
Are ya sure? Yesterday it was all doom and gloom. So which is it?

Dec 26, 2013 10:50am EST  --  Report as abuse
agular17 wrote:
All made up BS to bolster Obama.

Dec 26, 2013 11:10am EST  --  Report as abuse
agular17 wrote:
All made up BS to bolster Obama.

Dec 26, 2013 11:10am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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