Christmas retail sales were less than merry

Christmas sales, like the weather, were less than merry for most retailers, Statistics New Zealand figures out today showed.

December month retail sales fell a seasonally-adjusted 0.4 per cent from November, although excluding car sales the figure improved to a fall of 0.3 per cent.

It is one of the few figures recently which have not met economists' expectations. Economists had forecast a 0.1 per cent rise.

Actual sales for December were up 8.1 per cent at $5.79 billion on December 2003, the highest amount since the series began in 1995.

December quarter actual sales were up 7.4 per cent on the December 2003 quarter.

Sales adjusted for inflation and seasonal variation over the December quarter were up 0.7 per cent, against forecasts of a 0.9 per cent rise.

When car sales are excluded, the sales volume rise was 0.3 per cent.

Over the quarter, furniture and floor covering stores fared best with a 5.9 per cent rise followed by personal and the household goods hiring (4.8), appliance retailing (4.1) and cafes and restaurants (3.9).

The "other retailing" group saw sales fall by 4.3 per cent while household equipment repairers experienced a 3.2 per cent fall.

In the month of December, nine of the 24 store types had rises in seasonally adjusted sales.

The largest dollar value increases were in cafes and restaurants (up $14 million) and car sales (up $7m).

The largest fall was in petrol sales (down $21m).

In terms of prices, petrol was up 13.7 per cent over the year while appliance prices were down 6.5 per cent.

Appliances have dropped in price for nine successive quarters.

Meanwhile, some major retail chains were forced to issue profit warnings after a poor start to December, BNZ figures based credit card spending showed.

The spending figures also showed that after a weaker than normal December, stores have had a better than normal January.

Mitre 10 chief executive Craig Wilson said the 121-member hardware co-operative's experience backed up the bank's finding.

"December was softer than we would have liked but January sales have been strong," he said.

Mr Wilson said outdoor products started to sell with the warmer weather, but said the pattern of spending had varied much year on year.

"Typically what we're finding is people are spending later," he said.

Farmers chief operating officer Rod McDermott said his company had traded well in the summer.

"In fact, the month we got our strongest sales increase on last year was January," he said.

Life Pharmacies chief executive Tim Roper's co-operative of 18 pharmacies said total sales were up 6 per cent in January, from the same month last year, after a 5 per cent rise in December.

But prescriptions had driven growth, with sales of other items growing at a slower rate in that month.

BNZ chief economist Tony Alexander said there had been wildly varying comments from retailers about the strength of spending over December to January.

"Some retailers have said conditions were weak, some admitted this weakness was due to some branding issues, some have blamed the poor weather into mid-January," Mr Alexander said.

Feedback from retailers pointed to a squeeze on profit margins, because January was also a period of deep discounting by many retailers, which appeared to have lasted longer than normal, he said.

Along with better weather, that may have contributed to the rebound.

Mr Alexander predicted the rate of growth in retail sales would slow from 7 per cent in 2004 to about 3 per cent for the current year.

- NZPA and NZ Herald