2005 sales rise despite weak holiday numbers

Michigan retailers increased sales by 2.8 percent for all of 2005, up slightly from 2.5 percent the year before. However, Michigan retailers see a slow start to the new year, following another lackluster holiday shopping season.

Only two of every five retailers expect to increase first quarter sales over the same period last year, according to the monthly Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago.

Retailers posted, on average, a 1.9-percent decline in holiday sales from the previous year, according to the monthly survey. Going into the season they had projected a 5-percent gain. Although December was the second best month of an overall slow year, it wasn’t enough to salvage the season for the average retailer.

Although a majority of Michigan retailers held their margins on early sales of holiday merchandise, nearly a third reduced them in order to spur sales.

“Gift card sales may be keeping the holiday numbers down somewhat, since many cards are not redeemed until January or later,” said MRA Chairman and CEO Larry Meyer. “A clearer picture of the holiday season would consider the period from November to January.”

“Still, it’s easy to understand why many retailers are less than excited about the start of the new year,” he added. “They experienced a slower than expected holiday season and don’t see much good economic news on the horizon.”

The Index found that 39 percent of retailers increased sales in December over the same month last year while 49 percent recorded declines and 12 percent saw no change. The results create a seasonally adjusted performance index of 47.7, up from 45.8 in November.

In addition, 40 percent believe their sales will increase for January–March, while 29 percent forecast declines and 31 percent project no change. The results create a seasonally adjusted outlook index of 60.9, down sharply from 73.9 in November.

Sales tax collections dropped 4.9 percent in November and a steep 9.3 percent in December, after being up 5.2 percent in October. Excluding motor vehicle sales, December’s drop was 8.9 percent.

Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www.retailers.com/news/retailindex.html. The website includes figures dating back to July 1994.

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