Holiday sales are expected to increase 5%

NEW YORK — Holiday sales are expected to rise 5 percent this year, less than the 6.1 percent in the year-ago period, as consumers face still high energy costs, rising interest rates and a cooling housing market, the National Retail Federation said Tuesday.

The world's largest retail trade association estimates that total retail sales for the combined November and December period should reach $457.4 billion, compared with $435.6 billion in the year-ago period. The figures include business from grocery stores, health and personal care stores, home improvement stores, office supply stores and florists. Total sales, however, exclude business from auto dealers, gas stations and restaurants.

"Consumers have faced a number of economic challenges this year and have taken them in stride," said Rosalind Wells, chief economist of the National Retail Federation, in a statement. "Although sales will not be as robust as last year, retailers can still expect above-average holiday sales growth."

Shoppers have remained resilient throughout the year even amid rising gasoline costs, though the nation's merchants are experiencing a slight slowdown starting this summer.

From the January through June period, retailers averaged almost a 4.1 percent gain in sales at stores opened at least a year, known as same-store sales, according to the International Council of Shopping Centers-UBS tally. Same-store sales are considered the best indicator of a retailer's health.

In July, the nation's merchants posted a 3.9 percent gain in same-store sales and a revised 3.8 percent increase in same-store sales in August, which was fueled by a solid back-to-school shopping season and a strong drug store business.

But strong August sales figures from teen retailers such as American Eagle Outfitters Inc. and Abercrombie & Fitch Co. appeared to mask some signs of restraint in the monthly results at apparel merchants that cater to adults. That has left the outlook for the holiday season unclear.

J.C. Penney Co., which usually reports robust sales gains, reported disappointing August results, citing weak sales in big-ticket items like furniture. The exceptions have been luxury stores such as Nieman Marcus Group Inc., whose shoppers continue to splurge on status handbags and apparel.

Michael Niemira, chief economist at the International Council of Shopping Centers, expects same-store sales to be up 3 percent for the November-December period. That compares with 3.5 percent in the year-ago period.

In the toy world, sellers are counting on a number of electronic toys such as Webcams and new versions of digital music players to excite children. On Tuesday, Mattel Inc.'s Fisher-Price unveils at Toys R Us and other major toy sellers its Elmo T.M.X., an enhanced interactive version that until now has only been seen by a small group of toy executives. Such stealth marketing could help create some much-needed buzz, helping to jump start the holiday season.