Hurt by the fallout of Hurricane Sandy and fiscal-cliff jitters, U.S. holiday spending this year grew at the weakest pace since the economic chaos of 2008, preliminary data reveal.
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According to MasterCard’s (NYSE:MA) SpendingPulse, holiday sales inched up just 0.7% year-over-year during the pivotal eight shopping weeks between October 28 and Christmas Eve.
By comparison, SpendingPulse estimated holiday sales rose 2% last year, cooling off from robust rebounds from the Great Recession that sent sales tumbling 5.5% in 2008.
SpendingPulse measures total U.S. retail sales across all payment forms, including all cards, cash and checks.
It was a roller coaster holiday season for retailers as the extensive damage caused by Hurricane Sandy led to negative sales in the first two weeks of November. The Northeast and Mid-Atlantic regions “experienced substantial declines” in holiday sales during that period, MasterCard said.
Spooked by the declines, retailers ramped up on promotional activity during the second half of November, juicing sales but likely hurting profit margins.
SpendingPulse said the discounts online and within brick-and-mortar locations “appeared to be successful in stimulating growth,” but sales growth “subsided” in the first half of December.
The final days of the 2012 shopping season were also tumultuous as a late rebound was scuttled, likely by bad weather.
The disappointing sales figures appeared to weigh on stock prices as the S&P retail exchange-traded fund slipped 0.31% on Wednesday morning.
Shares of discount giants Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) were stuck in the red, while department store Macy’s (NYSE:M) lost more than 1%.
Some higher-end retail stocks like Coach (NYSE:COH) and Tiffany (NYSE:TIF) saw even heavier selling.
Hinting at the Sandy-related drag, SpendingPulse said holiday sales dropped by 3.9% in the Mid-Atlantic and dipped 1.4% in the Northeast.
On the other hand, sales rose 0.9% in the North Central, 1.2% in the Great Plains, 2.4% in both the Pacific and Southeast. The strongest two regions were South Central, which saw sales jump 2.6%, and Mountain where holiday sales climbed 4.1%.
Online sales also appeared to suffer a slowdown this holiday season.
SpendingPulse estimates eCommerce sales between October 28 and December 22 increased 8.4% year-over-year. By comparison, eCommerce sales were growing at between 15% and 17% year-over-year coming into the holiday season and for the last 18 months, MasterCard said.
The top spending day of this year was November 27 when U.S. consumers shelled out more than $1.5 billion in online sales.
Another analysis of online sales from comScore (NASDAQ:SCOR) suggested stronger-than-expected growth, revealing online sales soared 16% from a year earlier, The Wall Street Journal reported.
Shares of online retailers were mixed on Wednesday, with Amazon.com (NASDAQ:AMZN) dropping 1% but Overstock.com (NASDAQ:OSTK) rallying 2%.