- The Washington Times - Tuesday, January 16, 2007

NEW YORK — Retail sales aren’t expected to increase as much this year as they did last year because of a slowing economy, the National Retail Federation said yesterday.

The District trade group expects retail sales to increase 4.8 percent, compared with the 6.3 percent boost the industry saw last year. The group, which released the data at its annual convention yesterday, bases its estimates on U.S. Commerce Department data.

Sales will increase, but not by much, during the first half of the year. During the second half, sales are expected to increase more.

“We have concluded that weak economic activity will characterize the next few quarters before modest acceleration takes place in the second half of 2007,” the group said in a report.

Luxury and online retailers are expected to be the big winners this year, continuing the growth they saw in 2006, said Rosalind Wells, NRF’s chief economist.

Online sales rose between 11.5 percent and 16 percent during the first through third quarters of 2006.

“I can’t imagine it’s going to tail off to any degree,” Ms. Wells said.

Retailers focusing on middle- and lower-income shoppers will have a hard time boosting sales, she said. One company likely to feel that hit is Wal-Mart Stores Inc., the world’s largest retailer and a top destination for low-income shoppers, which in November recorded its first same-store sales drop in more than a decade.

Ms. Wells said the group is watching the housing market and how it will affect the retail industry. During 2006, as the market slowed, housing-related sales fell from 16 percent increases to 2.7 percent.

This year’s expected pattern of a slow six months, followed by “better increases” in the second half of the year, is the opposite of what happened in 2006, Ms. Wells said.

Last year, sales rose 6.3 percent, beating the group’s forecast of 4.7 percent. NRF attributed the increase to robust sales in the first half of last year.

But by the end of the year, sales were down. Holiday sales, which the NRF measures with November and December U.S. Commerce Department sales figures, came in at 4.4 percent, down from the 5 percent the group had predicted.

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