The National Retail Federation defines holiday sales as sales that take place in November and December. In 2005, holiday sales were up 6.1% to $435.6 billion. The NRF is forecasting a more subdued 5% gain in 2006 to $457.4 billion.
Yet even this forecast may be too optimistic. Wal-Mart, the nation's largest retailer, announced today that same-store sales in October were up only 0.5% year-over-year. If stores affected by last year's hurricanes are excluded, growth was 1.7%. Wal-Mart is seeing particular softness in women's apparel. What's worse, Wal-Mart is projecting no growth in U.S. same-store sales for November.
Ironically, just a few days ago investors cheered when Wal-Mart said it will slow capital spending in future periods. The stock rallied a couple of dollars per share in response. But that just turned out to be a selling opportunity. Wal-Mart has already given back those gains.
Some of Wal-Mart's losses may be going to Target, but that stock is selling off, too. So are other retailers such as Gap, Abercrombie & Fitch, and AnnTaylor, which also reported disappointing sales figures today.
The NRF's 5% growth forecast for the holiday season may be a bit too optimistic. Don't be surprised if it is revised downward in the near future.
