Market Playground

By Steven Hansen

Same store sales data assembled by the Bank of Tokyo – Mitsubishi UFJ were not significantly better YoY for the Christmas season.   Their headlines:

Same-store sales in December were very mixed, but disappointing overall, rising by just +2.8 percent on a year-over-year basis, based on BTMU’s tally of over 30 chain-store retailers representing nearly $50 billion in total sales. Combined with November results, however, the chain store sales holiday shopping season of 2010 was a great success. The sale-weighted average for November/December same-store sales increased +3.8 percent compared to just +1.5 percent in 2009, and was the strongest result since +4.4 percent in 2006.

Strength was not felt across the board where shopping has become clearly bifurcated in recent months. Consumer confidence has improved at the upper income level and that is reflected in the results of luxury retailers, who were the clear winners this holiday shopping season. Stock market gains and pent-up demand are driving the “haves” to spend, while the “have nots” are still suffering from high rates of unemployment and little to no income growth. Further, higher gas and food prices take up a higher percentage of disposable income at the lower income levels. We saw same-store sales increase strongly over the holiday shopping season for retailers such as Saks, Nordstrom, and Neiman Marcus, while apparel discounters and teen retailers largely underperform with few exceptions.

Readers will be inundated with many different variants of December 2010 retail sales numbers depending on the sample.  For example, on-line sales have been reported up from 12% to 18% – but on-line sales are not yet a significant part of Christmas retail sales.  The BTMU December 2010 sample was 30 major retailers (less WalMart the 600# gorilla).

But from the BTMU sample of retailers, December’s YoY increase was similar to any other month in 2010 – and that is very disappointing for the bulls who believed consumers would spend with reckless abandon during this holiday season.

The Consumer Metric Institute (CMI) Contraction Watch started flashing warning signs of a leveling off in consumer spending in late December.

The first estimate of the exact retail sales number will be released by US Census on 14 January 2011.

Steven Hansen is the Publisher and Co-founder of Global Economic Intersection.

Stocks mentioned in this article: Macys Inc (NYSE:M), Target Corporation (NYSE:TGT), J. C. Penny Company, Inc (NYSE:JCP), Costco Wholesale Corp (NASDAQ:COST), The Gap, Inc (NYSE:GPS), Saks Incorporated (NYSE:SKS), Nordstrom, Inc (NYSE:JWN), WalMart Stores, Inc (NYSE:WMT)