Holiday Shopping Weak Heading Into Homestretch

 |  Includes: RTH, XLY, XRT
by: Susan Lerner

Steep discounts are likely in store for last-minute holiday shoppers as retailers look to salvage a dismal shopping season. Whether the weather, economy, a disappointing merchandise selection or combination is to blame, the National Retail Federation estimates holiday spending will grow just 4% this year, the slowest growth rate in five years. "This holiday season at this point has been disappointing, whether they're brick and mortar, catalog or online," according to America's Research Group. "Shoppers are more frugal and cost-conscious because they have less money to spend."

One of the hardest hit areas is women's wear, with spending on apparel down about 6% during the first half of the shopping season when compared to last year, according to MasterCard Advisors, a division of the credit card company. That trend is especially troubling since women tend to be the biggest shoppers and their habits are closely followed by the industry. Men's wear, MasterCard said, did better, up 4.5% over the first 20 days of the season, while purchases of luxury items rose 10.8% and electronics purchases were up 5.8%. Online retailers may have had the best year, but the jury on them appears to be split. MasterCard called the group the year's "star," having seen spending growth of 30%, but ComScore Inc. reported just 18% growth for the sector from Nov. 1-Dec. 14, below last year's 26% growth and the 20% expected this season. Popular retail ETFs include Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY), Merrill Lynch Retail HOLDRs (NYSEARCA:RTH) and SPDR S&P Retail ETF (NYSEARCA:XRT).

Sources: New York Times, AP
Additional Reading: Retail Fading

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.