Weaker holiday spending trends could hurt e-commerce and retail alike

Posted Dec 18th 2006 12:36PM by Douglas McIntyre
Filed under: Analyst Reports, Industry, Wal-Mart (WMT), Target Corp. (TGT), Federated Dept Stores (FD)

MasterCard Advisors says that holiday spending is growing at about half of last year's 8% increase. The news is not exactly a bright spot for companies like Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT), or Federated. They need a sharp uptick to drive earnings. Wal-Mart especially needs a jolt.

Online sales growth is also slowing. The rate of increase has been over 20% in years past but Reuters quotes a SpendingPulse executive as saying "this year they're in the teens." This would seem to contradict data from ComScore that shows online spending up about 25% for the holidays.

If the MasterCard data is right, a lot of retailers are going to have rough fourth quarters.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: ComScore, holiday spending, HolidaySpending, MasterCard Advisors, MastercardAdvisors, SpendingPulse, Target, Wal-Mart