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U.S. retail sales look poised for a solid finish to the holiday season as consumers hit stores and went online to snap up last-minute gifts, according to data released on Wednesday.
Still, overall sales growth lagged the increase in online spending and some brick-and-mortar retailers struggled. Steep discounts were prevalent throughout the season, tactics that drove sales but could crimp profitability at some chains.
The International Council of Shopping Centers/Goldman Sachs weekly chain store sales index rose 4.5 percent during the week ending December 24, versus a holiday-shortened pre-Christmas Day week in 2010. Redbook Research put the year-over-year gain at 4.3 percent.
Adjusted for the calendar mismatch, the ICSC/Goldman index rose 0.9 percent for the week ending December 24, compared with the prior week.
"The finish is solid and the season itself was good," said ICSC Chief Economist Michael Niemira. "November was on the soft side but December will be better."
ICSC is sticking with its holiday sales growth forecast of 3.5 percent, which it issued in September.
"Major players, such as Macy's (M-N), are fine," Niemira added. "Specialty stores are likely to be more uneven. Specialty apparel seems to have been hit by abnormally warm weather. Sales were on the slow side and there has been more discounting consequently."
The biggest shopping malls and regional malls saw the strongest customer traffic since the first week of 2011. Factory outlets remained busy, but less so than the prior week, he said.
Consumers ratcheted down their online spending compared with earlier in December, but visits to and spending at electronics and department stores increased during the week, Niemira noted.
U.S. consumer confidence rose more than expected in December, hitting an eight-month high, as Americans grew more upbeat about the labor market and their financial situation, the Conference Board said on Tuesday. That followed a report early in December showing U.S. unemployment at the lowest level since March 2009.
However, U.S. house prices are still falling, tempering economic optimism, and some retailers are suffering.
Sears Holdings Corp (SHLD-Q) said on Tuesday that it will shut as many as 120 stores after poor sales. Borders Group and Filene's Basement were among retailers that filed for bankruptcy protection from creditors this year, and shut down, with Filene's stores set to close shortly.
Part of the problem may be competition with online retailers, who saw faster sales growth this holiday season, suggesting e-commerce took market share from brick-and-mortar stores.
Online spending in the United States reached a record $35.27 billion from November 1 through December 26, up 15 percent versus the corresponding period last year, comScore (SCOR-Q) reported.
For the week ending December 25, consumers spent $2.83 billion online, up 16 percent from the corresponding period in 2010, comScore also said.
"E-commerce is going to be awesome this holiday and retail will be mediocre," said Michael Rubin, head of Kynetic, which owns online retail businesses Fanatics, Rue La La and ShopRunner.