Holiday Shopping Season Gets Early Start
WASHINGTON ( TheStreet) -- The retail forecast for the next six months suggests the holiday shopping season has already begun.
Despite some ominous signs in May -- including a 1.2% decrease in retail sales, a 2% drop in existing-home sales and a 33% collapse in new-home sales -- the retail community found reasons for optimism. Consumer confidence jumped 5.6% to its highest level since September 2008, while the University of Michigan's Consumer Sentiment Index rose to 76 two weeks ago from 73.3 in May and beat economists' forecast of 75. It may seem small, but with Toys "R" Us announcing last month that it's setting up a "Christmas Savers Club" for its customers, a little optimism goes a long way.
The National Retail Federation expects disposable income to rise 2.5% this year and spending to increase 3%, citing the addition of a million new jobs and an improvement in the housing market. While it acknowledges that nearly half of those new jobs are government and census-worker positions, which don't come close to restoring the more than 8 million jobs lost during the recession, and that the expiration of the homebuyer credit could play havoc with housing, it sees even minimal job creation and low mortgage rates as steps in the right direction.
So where is this newfound windfall going in the next six months? If the Commerce Department's estimate of 7.5% retail growth in the first five months of this year are any indication, it should be a happy holiday season in several categories. Online retailers like Amazon (AMZN), eBay (EBAY) and Overstock.com (OSTK), for example, saw a 13% spike in business in the first five months compared to 2009 as frugal shoppers went digging for deals.Clothing sales, meanwhile, jumped 4.7% in the first half as retailers such as Urban Outfitters (URBN) and The Limited (LTD) saw gains and a survey by BIGResearch found that 13% of respondents felt it was time to spend on apparel for themselves. There's not going to be enough room for everyone at the holiday table: Department store sales fell 0.6% in the same period.
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