Amazon.com, EBay Shares Fall as Online Shopping Slows (Update1)
By Joseph Galante
Dec. 14 (Bloomberg) -- Amazon.com Inc., EBay Inc. and other retailers fell in U.S. trading as cash-strapped consumers limited their Internet holiday purchases of leather coats and high-definition televisions while waiting for better bargains.
Sales from Nov. 1 through Dec. 11 increased 19 percent to $20.5 billion, Reston, Virginia-based ComScore Inc. said late yesterday. Online sales in November and December may rise 20 percent, a record low for the industry, and slower than the 26 percent pace of a year earlier.
U.S. retailers may see the worst sales growth this holiday season since 2002 as shoppers grapple with $3-a-gallon gasoline and consumer prices that rose the most in more than two years in November. Target Corp., Kohl's Corp. and J.C. Penney Co. have responded with discounts of 50 percent or more to lure customers.
``If the consumer doesn't have money and isn't buying, there's only so much the online channel can do,'' said Larry Freed, chief executive officer of online research firm ForeSee Results Inc. in Michigan. ``To get a 25, 30 percent growth rate is going to be tough.''
Retailers' shares have dropped during the holiday season, with the Standard & Poor's 500 Retailing Index falling 8.8 percent since the start of November through yesterday, compared with a 3.9 percent decline on the S&P 500.
Amazon.com, the world's largest online retailer, fell $1.93, or 2.1 percent, to $90.47 at 1:05 p.m. in Nasdaq Stock Market composite trading. EBay, the largest global auctioneer, dropped $1.18, or 3.5 percent, to $32.90. Circuit City Stores Inc. decreased 66 cents, or 8.9 percent, to $6.75.
Internet Sales
Internet sales, which make up more than 3 percent of total retail sales, may be the fastest-growing retail channel this holiday season. Online sales may grow to $29.5 billion in November and December from $24.6 billion a year ago, ComScore predicted.
``In a rapidly growing market like e-commerce, very high growth rates become more difficult to sustain as the market gets bigger,'' ComScore spokesman Andrew Lipsman said in an e- mail. ``It doesn't mean the growth rate this year is necessarily a sign of weakness.''
The slowdown contrasts with government data that showed retail sales in November rose at twice the rate anticipated by economists.
Retail sales increased 1.2 percent in November, the Commerce Department said in Washington yesterday. That followed a 0.2 percent increase in October, the agency said.
Shopper Visits
Sales fell 2.7 percent in the seven days through Dec. 8, following a 4.4 percent decline a week earlier, Chicago-based research firm ShopperTrak RCT Corp. said this week. About 12 percent fewer shoppers visited stores last week compared with the same period a year ago, ShopperTrak said.
Consumers are completing their holiday shopping later than usual, and they're trimming purchases as they pay for more for food and fuel. The National Retail Federation in Washington forecast a 4 percent increase in holiday sales this year.
While the Monday after Thanksgiving has been promoted as a so-called Cyber Monday because of a pattern of higher online shopping after the U.S. holiday weekend, days closer to Christmas have seen higher amounts of purchases.
Last year, Cyber Monday was the 12th-heaviest online shopping day, while Dec. 13 had the biggest sales, according to data from ComScore.
Profit Margins
Stores may further reduce prices, hurting profit margins, to lure bargain hunters. Target, the second-largest U.S. discount chain, and J.C. Penney, the nation's third-biggest department-store company, missed analysts' sales estimates for November. CompUSA, the 23-year-old computer retailer, said Dec. 7 it will shut down after the holidays.
Office Depot Inc., the world's second-largest office- supplies chain, forecast ``continued erosion'' of sales and earnings in the fourth quarter because of declining demand from corporate customers. Sales at Office Depot and Staples Inc. have slowed as small businesses and consumers buy fewer copiers and furniture during the worst housing slump in at least 16 years.
To contact the reporter on this story: Joseph Galante in New York at jgalante3@bloomberg.net .
Last Updated: December 14, 2007 13:12 EST |
