Moody’s: Holiday sales to grow 4.5%; earnings to grow at 3.5% to 4.5% in 2012

New York -- Retail sales growth in the United States will rebound from the third quarter this holiday season, but will be down on the previous two years' robust gains, according to a new report by Moody's Investors Service. The study, "Holiday Sales Will Overcome the U.S. Fiscal Policy Grinch," also finds that earnings growth will be slightly stronger.



“We expect holiday sales growth of about 4%, down from 6.5% in 2011," said VP, senior credit officer Margaret Taylor. "But while sales will be down, earnings are on track to grow at 3.5% to 4.5% for the full year 2012, compared with 2.7% last year."



Online spending will be a bright spot for retailers this holiday season.



"We expect online spending to increase about 15% year over year, far outpacing the growth in overall holiday sales," Taylor said.



Retailers whose goods are perceived to provide good value are expected to perform well, as are the toys, electronics and party goods segments. In electronics, the new Kindle and iPad, Nintendo's Wii U and new game releases will drive sales this holiday season, though heightened price competition may constrain margins. Apparel retailers' earnings will continue to benefit from lower commodity costs, particularly for cotton, as well as easy comparisons with last year's weak sales.