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National retail trade group predicts slight decline in holiday season sales

Holiday-season sales are forecast to increase 3.7 percent, not as much as a year ago but still solid, the head of the National Retail Federation said Thursday.

Pat Ficarotta shops in the holiday section at Kohl’s in Yardley. Many such retailers plan to add seasonal jobs. (WILLIAM THOMAS CAIN/For The Inquirer)
Pat Ficarotta shops in the holiday section at Kohl’s in Yardley. Many such retailers plan to add seasonal jobs. (WILLIAM THOMAS CAIN/For The Inquirer)Read more

Holiday-season sales are forecast to increase 3.7 percent, not as much as a year ago but still solid, the head of the National Retail Federation said Thursday.

November-through-December sales increased 4.1 percent last year, compared with 2013.

"It's a strong, solid, realistic forecast reflective of the current state of the consumer and overall macroeconomic conditions, including historically low gas prices, home values improving, and consumer spending improving," Matthew Shay, president and CEO of the retail trade group, said during a conference call with reporters. "We are in position for a good holiday season."

Traditionally, most retailers depend on robust holiday shopping to give their annual sales and profit a big lift.

The annual holiday sales forecast is based on an economic model using several indicators, including consumer credit, disposable personal income, and previous monthly retail sales data.

Shay said online sales on mobile devices during the busy shopping season are expected to rise 6 percent, up from last year's 5.8 percent gain.

Job creation and global economic uncertainty affect how much people spend, and that's a big factor in the health of the retail industry, he said.

"Retailers recognize that consumers are spending and will spend when presented with the right product, price, and experience," Shay said. "Retailers are required to be really competitive."

Meanwhile, more than 5,000 retail executives converged in Philadelphia this week for the Shop.org Digital Summit, which highlighted the convergence of retail, technology, and consumer data.

The two-day trade show was sponsored by the National Retail Federation.

Jack Kleinhenz, the trade group's chief economist, said "the consumer continues to be a driver of the economy and is keeping afloat a lot of [spending] activity."

He said deflation was a factor in this year's holiday forecast.

"While confidence data is encouraging, slower job growth in 2015, deflationary retail prices, and the mix of consumer spending somewhat shifting toward big-ticket items and services all contribute to the slower growth rate of sales expected for the holiday season," Kleinhenz said.

Shay said the retail federation expects retailers to hire about 750,000 seasonal workers nationwide during the holiday shopping season, up from last year's 715,000.

"Many retailers will convert many of those positions into full-time ones after the holidays," he said.

The retail federation's holiday sales forecast comes two weeks after one by consulting firm Deloitte L.L.P. predicted that retail sales will jump as much as 4 percent during the holiday season.

That is less than the forecast of a 5.2 percent increase for last year.

Simeon Siegel, senior retail analyst at Nomura Securities International Inc. in New York, said these final three months of 2015 are critical for the retail industry.

"Across my coverage last year, the fourth quarter drove an average of 31 percent of total year sales, 32 percent of gross profit, and 36 percent of 2014's earnings per share," he said of retailers.

sparmley@phillynews.com

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