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Visa warns of potential for weaker holiday ’06 sales

Summary

Visa has cautioned that sales for the 2006 holiday season may be weaker than it previously estimated.

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Visa is now forecasting overall holiday 2006 sales that may be weaker than initial estimates due to a slow November, even after retail sales increased during the first 10 days of December.

Visa, whose cards make up 17 percent of U.S. retail spending, now predicts that retail expenditures could fall short of its previous outlook for a 7.5 percent rise during the combined months of November and December.  The credit card association had earlier reiterated its projection in late November on the heels of the post-Thanksgiving “Black Friday” start to holiday shopping.

According to Visa’s chief economist, the combination of mild November weather that hurt demand for fall fashions and a decline in gas prices that lowered average purchases at the pump could result in a retail sales increase of as little as 7 percent, down from 2005’s gain of 8.3 percent.

Visa’s chief economist also said that procrastination among consumers poses a threat to holiday sales.

Separately, Visa foresees December 23 as the busiest day for holiday shopping, with December 22 (which was the busiest day in 2005) coming in second busiest.  And, even though Visa is warning of lower holiday revenues, sales have strengthened in December.  That rise is based in part on a recent recovery in gas prices, which have boosted the average purchase at the pump by almost 5 percent, Visa’s economist explained.

One of the bright spots this holiday shopping season comes in the form of sales at online merchants, which have accelerated this month, based on Visa’s data.  The card association’s economist lauded faster turnarounds on shipments which are stretching the window for free shipping and should help lift online sales this holiday season as a whole.

Consumers looking to do some online shopping but needing a credit card should compare the various types of credit cards available at CreditCards.com, such as low interest credit cards and reward credit cards.

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