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Holiday sales beat expectations

The 5.7 percent surge was the retail industry's best since 1999, but uneven sales and price-cutting marked the season.

Published January 14, 2005

Retail forecasters predicted a modest boost in sales for the holiday season and it turns out they had it just about right.

The U.S. Commerce Department Thursday reported that general merchandise, apparel and furniture sales rose 5.7 percent during the two-month season.

Though not spectacular, it was the retail industry's best holiday performance during November and December since 1999. The results exceeded the forecast of a 4.5 percent gain by the National Retail Federation.

"Even after all the hand-wringing by retail analysts, the holiday season ended on strong footing," said Rosalind Wells, chief economist for the National Retail Federation.

But there was plenty of evidence that consumers were again cautious about spending and not every category posted decent sales gains.

With interest rates rising, the forecast was for a solid but lackluster season. December's gain was only marginally better than November's, jobless claims rose unexpectly higher to 367,000 and inflation ate up about half the sales gain. Most consumers responded mainly to last-minute discounting and bargain pricing.

Much of the improved sales came the week after Christmas, thanks to the pulling power of clearance sales and the staggering popularity of gift cards that people began redeeming immediately. With sales estimated at $17-billion, shoppers spent more on gift cards this holiday than they did on Internet retailing sites.

"We were starting to sweat it," said Lisa Pense, a Burdines store manager in St. Petersburg. "Then the season really kicked in. It came down to the last two weeks."

Including auto sales, gas and restaurants, the Commerce Department reported that retail sales rose 1.2 percent in December on a seasonally adjusted basis. That powered retail sales to a 0.9 percent gain for 2004, the biggest gain since 1999.

For retailers, many of whom rely on the year-end holiday season for up to a third of their annual sales and up to half their annual profits, the 2004 holiday season performance was nonetheless uneven.

"It was really more a season of winners and losers than an unusually strong year," said James Rice, retail analyst for Bernard Sands, a New York firm that tracks retailers' performance for the industry's suppliers. "Wal-Mart bounced back (from a slow start) but they cannot be happy with their overall season. Business at department stores was just mediocre."

The luxury stores such as Saks Fifth Avenue, Neiman Marcus and Nordstrom did best, along with some specialty stores such as Chico's and American Eagle. Toy stores, which are fighting a price war with discount stores, had a tough time. While sales of furniture, electronics and home furnishings were strong, sales of clothing and clothing accessories declined.

Mark Albright can be reached at or 727 893-8252.

[Last modified January 14, 2005, 00:30:19]

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