Moody's boosts focus on online retail sales

NEW YORK (Reuters) - Online retail sales, projected to top $300 billion in the next five years, have become a more important factor in retailers' credit ratings, Moody's Investors Service said on Monday.

"A strong online presence is considered a ratings positive more frequently than in the past" and can mitigate declining same-store sales trends, Moody's senior credit officer Maggie Taylor said in a report.

U.S. online sales rose 19 percent to more than $136 billion in 2007, Moody's said, citing data from the U.S. Census Bureau. By comparison, online sales totaled just $4.6 billion in 1999.

High gasoline prices should lead to fewer trips to the mall, inducing consumers to spend even more online at the expense of brick-and-mortar stores, Moody's said.

"Despite general soft retail spending, online sales are expected to continue to grow at a healthy rate," the rating agency said. Online sales will approach $200 billion in 2008 and could exceed $300 billion in five years, Moody's said, citing Forrester Research estimates.

"Online sales are one of the few bright spots for specialty retailers right now," Moody's said.

The trend will benefit retailers that focus solely on the Internet, such as Amazon.com, and retailers with a significant online presence, including Wal-Mart Stores J.C. Penney, J. Crew Group, Macy's and Limited Brands, Moody's said.

J.C. Penney partly compensated for its flat comparable-store sales performance in fiscal 2007 with 15 percent growth in online sales, Moody's said.

Online sales are typically not included in most retailers' monthly same-store sales.

(Reporting by Dena Aubin; additional reporting by Matt Daily; Editing by Tom Hals)