WASHINGTON — Holiday markdowns at fashion retailers helped drive sales growth last month, although the impact on the bottom line is unclear.
Sales at apparel and accessories stores rose a seasonally adjusted 0.6 percent compared with November and were up 5.5 percent from December 2005 to $18.1 billion, according to the Commerce Department's monthly report on retail spending.
Department store sales inched up a seasonally adjusted 0.2 percent compared with November and were down 0.5 percent from a year earlier to $17.7 billion.
Retailers reported soft same-store sales for the month versus last year, even with a late rush to the stores.
"They slashed prices a lot so their comps weren't great, but people were out in droves, spending up a storm," said Richard Yamarone, chief economist at Argus Research Corp. "The consumer spending trend is strong, but whether retailers can translate this into higher profit margins is a different story."
Overall retail and food service sales increased a seasonally adjusted 0.9 percent in December — the most since July — with help from stronger growth at electronics and appliance stores and at gas stations.
The National Retail Federation said holiday sales, excluding turnover in automobiles and at gas stations and restaurants, rose 4.4 percent, underperforming the trade group's projection for 5 percent growth.
"[The] NRF expects these subdued gains to continue into the first half of 2007," NRF chief economist Rosalind Wells said in a statement.
Though the slowing housing market is a concern for many investors, the economic ripples of the drop-off might be overstated in the case of consumer spending, said Kimberly Greenberger, equity analyst at Citigroup.
"Consumer spending is most closely correlated with disposable personal income growth, pointing to a healthy consumer heading into 2007 based on solid wage growth and low unemployment levels," Greenberger wrote in a research note Friday.
Consumers might get a break on fuel costs as lower crude oil prices translate into lower gasoline prices, said Rajeev Dhawan, director of the economic forecasting center at Georgia State University.
"But you're not going get a break if the general economy slows," said Dhawan. "What matters overall is, there is nothing available to make up for the shortfall in the housing and manufacturing sector. It's not like the bottom is going to fall out for the two [sectors], but the oomph will be gone from retail sales as the two sectors do less than normal."
Issa Rae stopped by WWD's NYC headquarters to talk about season two of "Insecure," which premieres this Sunday on HBO. Click link in bio for all the details. #wwdeye (📷: @jgreenery; Styled by @mayteallende)
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