December Retail Sales Disappoint

December retail sales failed to impress, as heavy discounting and cheaper fuel prices depressed the value of goods.

Seasonally adjusted monthly retail sales figures for December rose only 0.1%, after gaining 0.4% in November, but were up 6.5% from December 2010, according to data released Thursday by the Department of Commerce. Economists expected a 0.3% increase, according to Thomson Reuters. "Retail sales is more in line with the post Black Friday anecdotes. The weakness in the core area is disturbing," David Ader, a strategist at CRT Capital Group, said in an email. "It looks odd to see electronics and non-store retailers come in with negatives."As retailers went to great lengths to get shoppers in to stores with steep discounts and extended hours throughout the holiday shopping month, overall sales suffered. Sales excluding car sales fell 0.2% from last month, while total retail sales were flat. Strength in auto and home furnishing sales supported gains, rising 1.5% and 1% respectively in December. Meanwhile, weak technology sales did the most to suppress gains as electronic store sales fell 3.9% from last month. Falling oil prices last month also hurt gains as gasoline station sales dropped 1.6%. Online retailers also saw losses as sales fell 0.4% after a successful Cyber Monday in November pushed November sales up 1.5%. Yet a 10.6% gain over December 2010 points toward a growing trend in online shopping. All the holiday shopping and deep discounts did not dampen shoppers' appetites as food service place sales climbed 0.7% in December. Williams-Sonoma(WSM) reported holiday sales today that supported the disappointing trend seen in the government retail sales data. The San Francisco-based retailer lowered its full-year and fourth-quarter guidance despite better holiday sales as high promotional activity limited profit. Though the company reported that net revenues for the 8-week holiday period ended Dec. 25 increased 4.2% to $901 million, the company cut fourth-quarter earnings projections to $1.10 to $1.15 a share, from a previously estimated $1.15 to $1.20 a share as steep discounts hurt the bottom line. To follow the writer on Twitter, go to @Kaitlyn_Kiernan. >To order reprints of this article, click here: Reprints