Retailers' holiday sales drop at least 5.5 percent

By ELLEN SIMON

AP Business Writer

updated 9:22 p.m. ET Dec. 25, 2008

NEW YORK - It's official: This was a rotten holiday season for retailers.

A weak economy and strong winter storms brought total retail sales down between 5.5 percent and 8 percent from a year ago, according to preliminary data from SpendingPulse.

Many economists have predicted this would be the worst holiday season in decades as home prices plunged, unemployment rose and nervous consumers cut costs. Compounding retailers' problems were unexpected winter storms that snowed-in would-be shoppers everywhere from Seattle to Las Vegas to Boston.

When gas and auto sales are excluded from the holiday period from Nov. 1 to Dec. 24, overall sales were down somewhere between 2 percent and 4 percent, according to SpendingPulse, a division of MasterCard Advisors that tracks total sales paid for by credit card, checks and cash.

During the holiday season, gasoline prices were down 40 percent from a year before.

A separate measure of holiday spending, from the International Council of Shopping Centers, is expected to fall 1.5 percent to 2 percent from last year, making this the worst season since 1969. A full picture of the season won't be known until Jan. 8, when major retailers report their sales results.

Food sales were strong, while clothing sales — especially the most expensive clothing — were dismal, SpendingPulse said.

Sales of women's clothing dropped 22.7 percent, according to SpendingPulse. Men's clothing sales dropped 14.3 percent and footwear sales fell 13.5 percent.

Total sales of luxury goods — defined as the highest priced tenth of jewelry, clothing and leather goods — fell 34.5 percent.

Sales of electronics and appliances were down 26.7 percent, leaving electronics retailers more rattled than any others.

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