Retailers’ Performance Getting Mixed Reviews

How are holiday retail sales looking three days after Christmas? It depends on whom you ask.

According to one estimate released Monday, credit card purchases through Christmas Eve were a sturdy 8.1% ahead of last year. And that “would indicate that we did in fact have a strong holiday season,� said Michael McNamara, director of research for MasterCard Advisors, the unit of MasterCard International that released the report.

The industry’s main trade group stuck with its reckoning that retail sales ultimately would rise 4.5% over last year. “It’s going to be an average holiday season, just like we thought all along,� said Scott Krugman, a National Retail Federation spokesman.

On the other hand, the International Council of Shopping Centers said it figured there would be a mere 2.5% to 3% increase in same-store sales, a measure that’s important because it includes only stores open a year or more. Of course, gift cards -- which retailers can’t log as sales until they’re redeemed -- could boost that percentage if they start burning a hole in people’s pockets.

“I don’t know what the real underlying number will be when you put all the pieces together,� said Michael Niemira, the shopping council’s chief economist.

Take a report issued late Monday afternoon by Visa USA, which indicated that purchases with its cards gathered steam as the season unfolded. Sales on Visa cards in the week that ended Dec. 26 grew to nearly $25.4 billion, a 31.8% increase over the prior year and more than double the growth rate of the prior week.

The caveat: There’s no telling how much of the increase was attributable to higher retail sales and how much was due to an increase in the use of Visa cards.

Indeed, the wide variations in statistics, forecasts and estimates Monday were partly due to the fact that the groups and businesses were measuring different things.

Numbers compiled by data service SpendingPulse for MasterCard Advisors, for example, include online sales and gift card purchases, which aren’t included in same-store sales. It also includes groceries, meals out and purchases of other goods such as building materials that aren’t necessarily related to holiday spending. At the same time, SpendingPulse factors out some variables that could otherwise be misleading, such as the growth in the number of MasterCards being used, McNamara said.

“This number represents the broadest measure of retail sales in the U.S.,� he said. “It’s a good barometer of what’s going on in retail sales in the U.S. economy.�

Investors apparently weren’t encouraged. A Morgan Stanley index of 38 major retail shares dipped 0.2% on Monday, though some issues ticked up.

Wal-Mart Stores Inc., the world’s largest retailer, gained 24 cents to $52.79 after it said sales at U.S. stores open at least a year were moving up about 2% from last year; Wal-Mart also said sales of gift cards rose “significantly.� Target Corp., the No. 2 U.S. discount chain, gained 81 cents to $51.31, while Circuit City Stores Inc., the second-biggest U.S. electronics chain, added 16 cents to $15.42. All three trade on the New York Stock Exchange.

If Wall Street didn’t know what to do, it was no wonder. The holiday season thus far has been consistently inconsistent.

With hefty markdowns beckoning, consumers pushed same-store sales up 11% the day after Thanksgiving, the official launch of the shopping season, before quickly pulling back. Sales indicators have vacillated since.

Heavy mall traffic prompted by clearance sales and shoppers returning purchases could give retailers a chance to boost holiday sales this week, Krugman said. More results will be released today.

Die-hard procrastinators gave retailers a boost, according to Visa USA, which showed consumers and businesses charged $4.35 billion on Christmas Eve, an 11.7% increase over Dec. 24, 2003. Visa’s numbers include all items charged on Visa cards, including gift cards and groceries.

One thing that remained a constant was the evidence that kept piling up that big spenders were flexing their muscles. The strongest gain in the SpendingPulse report was in transactions that totaled more than $1,000, which rose 13.5% over last year.

For now, industry experts are waiting to see how quickly consumers will turn gift cards into purchases.

“What we’ll be looking for is how strong the gift card redemptions are this week,� Niemira said. “That could make a modest increase into a better increase than expected. We’ve seen that happen. I’m not anticipating it will happen necessarily, but who knows?�

Bloomberg News was used in compiling this report.