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Preliminary Data Indicates Weak Holiday Sales Amid Fiscal Cliff And Other Factors

Preliminary data covering the entirety of 2012 holiday sales indicates fairly weak activity compared to recent years, and this has been attributed to a litany of economic challenges ranging from the looming fiscal cliff to Superstorm Sandy.

Weak Holiday Sales 

Preliminary data covering the entirety of 2012 holiday sales indicates fairly weak activity compared to recent years, and this has been attributed to a litany of economic challenges ranging from the looming fiscal cliff to Superstorm Sandy.

Weak Holiday Sales 
Reuters reports that this year, retailers may have suffered their weakest holiday since the financial crisis, registering sales that fell far short of expectations. While the sales data is being finalized, many market experts predict that while WalMart Stores Inc. and Gap Inc. probably held up well, JC Penny Co Inc. and bookseller Barnes & Noble Inc. are thought to have generated far worse performances.

"The broad brush was Christmas wasn't all that merry for retailers, and you have to ask what those margins look like if the top line didn't meet their expectations," Kim Forrest, senior equity research analyst at Fort Pitt Capital Group, told the news source.

The media outlet reports that while market experts always thought the existing economic expansion was going to decelerate during the 2012 holiday season, Superstorm Sandy impacted holiday sales and the looming fiscal cliff served to make markets more wary.

Sales Data 

Data provided by MasterCard Advisors SpendingPulse on December 25 indicates that the nation's holiday shopping expanded at a rate of 0.7 percent between October 28 and December 24, according to Bloomberg. This pace of growth was close to one-third of the 2 percent recorded during the same period in 2011.

On December 26, shopping facility trade organization The International Council of Shopping Centers reiterated its previous prediction that retail stores that have been open for at least one year will experience sales that grow 3 percent in November and December, lower than the 3.3 percent rate for 2011.

According to a statement released by the ICSC, sales increased 0.7 percent during the week ending on December 22 from the week before. However, this week was 3.2 percent above the same period in 2011.

The shopping facility trade organization predicted that sales will rise during the week ending December 29, in part due to strong expected activity in the two days before Christmas. Michael Niemira, ICSC vice president and chief economist, predicted that sales will rise as a result of clearance discounts and people using their gift cards.

He said that he does not anticipate retailers making "huge across-the-board type of reductions" during their post-Christmas clearance sales.

Finally, ICSC said that in December 2012, sales will increase by a similar amount to that enjoyed during the same month in 2011, predicting that growth in this measure will be between 4 and 4.5 percent during this winter month, when monthly reports are released on January 3.

Fearful Consumers 
Reuters reports that while the fiscal cliff has been blamed by many for creating uncertainty amongst market participants, a recent poll conducted by Ipsos revealed that a mere 17 percent of shoppers surveyed were reducing the time they spend shopping as a result of the fiscal cliff. Still, the study indicated that the looming fiscal policy changes are impacting the sentiment of consumers.

Marshal Cohen, chief industry analyst at The NPD Group, said that "the government usually does not have a role in holidays but this year they did. They got right in the midst of it, the timing couldn't have been any worse."

According to the news source, Hurricane Sandy was a major challenge for sales, reducing this activity in the U.S. at the end of October and beginning of November.

Since the final holiday sales data is not expected to be stellar, what is your retailer doing to prepare for the possibility of weak figures? 

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