US retail stocks fell on Wednesday as sales figures for the holiday period disappointed in spite of a last-minute rush by shoppers in the days before Christmas and heavy discounting by stores. Shares in Target, the discount retailer, fell 2.5 per cent after it warned that sales could decline this month, denting hopes of a Santa Claus rally . Earlier, it had predicted a gain of as much as 5 per cent.
Target and other retail stocks were hurt further by a report by MasterCard Advisors, a unit of the credit card group, which said consumer spending climbed by only 3.6 per cent between Thanksgiving and Christmas. The gloom deepened when the International Council of Shopping Centres warned that same-store sales or sales at stores open a year during the November-December period were below projections of a 2.5 per cent gain.
The reports fuelled concerns that consumers, hit by the housing market slump, rising petrol prices and the credit crisis were shying away from the shops. Indeed, US home prices fell 4.5 per cent in the third quarter from a year earlier, the sharpest drop since Standard & Poor s began its nationwide housing index in 1987 and another sign that the housing slump is far from over. The dollar declined against the euro and slipped slightly versus the yen.
But shares of online retailer Amazon.com rose more than 2 per cent after the company said the 2007 holiday season was its strongest to date, raising hopes of healthy online sales. There was mixed news for stores in Europe. UK retailers fears of a bleak period looked to have been eased by a last-minute surge of shopping but concern over profits remained after widespread discounting of stock in the run-up to Christmas.