Wal-Mart is missing out on the consumer comeback.

The world’s largest retailer failed to reverse an almost two-year slide in a key revenue measure in its fourth quarter, it said Tuesday, after all but promising in November it would do just that.

At Wal-Mart, fewer customers are coming in the door. At most other retailers, holiday shoppers spent more, and consumer confidence is now at its highest point in three years.

Wal-Mart’s mistakes in merchandise and prices, along with financial stress on its lower-income customers, forced it to rely on international growth and cost-cutting to post a 27 percent increase in fourth-quarter net income.

Wal-Mart’s 1.8 percent decline in revenue at U.S. discount stores open at least a year, its seventh straight quarterly drop, was worse than feared. That important measurement of a retailer’s health excludes stores that open or close during the year.

For the past year, the discounter has seen customer counts decline as it lost shoppers to rivals like dollar stores for quick trips to buy milk and diapers.

Wal-Mart had hoped sweeping changes, from restoring thousands of products it stopped carrying and going back to offering low prices across the store, would help sales rise again.

It’s now clear there won’t be a quick fix.

“Wal-Mart’s holiday season was lackluster compared to everyone else,” said Ken Perkins, president of research firm RetailMetrics. “This might be a deeper hole to dig out than (Wal-Mart) had thought.”

Wal-Mart’s sprawling one-stop shopping format is facing challenges because shoppers are changing the way they buy. They’re buying closer to when they need things and “are happy to make multiple trips” to smaller, more convenient stores to get the best value, UBS analyst Neil Currie said.

Wal-Mart’s disappointing holiday report stood in contrast to positive reports Tuesday from Home Depot Inc., which posted its first yearly revenue increase since 2006, and Macy’s Inc., whose 50 percent profit increase was helped by strong holiday sales and a tight hold on expenses.

Also Tuesday, The Conference Board said consumer confidence hit its highest level in three years in February as Americans feel more optimistic about their income prospects and the economy.

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After six consecutive quarters in retreat, businesses in the third quarter increased spending on new computers and software at an annual rate of 1.1%. That marked an about-face from the first quarter’s annualized 36.4% plunge.

Indications that business spending is starting to revive are vital to future growth — because there is no political support for the government to indefinitely prop up the economy.

“That is a sign of the private sector getting some confidence back and starting to rebuild the capital stock,” Christina Romer, who chairs the president’s Council of Economic Advisers, told reporters.

“I think we’re going to be fine. My anticipation is we’re going to sort of grow moderately… We’re going to have to see if the private sector comes back,” she said.

The economy was propelled by incentives for consumers to buy homes and cars, among a series of extraordinary interventions by Washington in the market. But federal enticement won’t last forever. The cash-for-clunkers program, which sparked auto sales, has expired, and the fate of a tax credit for first-time home buyers is unclear.

The government initiatives were designed to stabilize the economy until private companies could rebound from last year’s financial crunch. With credit still tight — especially for small businesses — there have been few signs of such rebirth.

Now, resurgent equipment spending may signal that the private sector is beginning to stir, Romer said. Business spending on equipment and software peaked at $1.1 trillion in the fourth quarter of 2007 before shrinking by more than 21% amid the global downturn.

http://www.usatoday.com/money/economy/2009-10-29-business-spending-economy-romer_N.htm

Christmas shoppers this year are expected to shop with a little more glee compared with last year’s gloomy holiday sales season, but Halloween sales are slated to plummet as shoppers spend an estimated 15.4% less than last year, according to two separate studies by the International Council of Shopping Centers and National Retail Federation.

Last year’s holiday season was the worst in four decades despite aggressive price cuts, but sales are expected to increase 1% this year at major U.S. chain stores that have been open for at least 1 year. Retailers are scaling back inventory and many are reducing the number of seasonal employees to save on costs.

For those looking for seasonal work, that’s bad news because 40% of retailers said they would hire between 5% and 25% fewer workers this holiday, and 62% said they’ve already been swamped with more applications this year than last year.

As for the quickly approaching Halloween season, shoppers are expected to spend an estimated $56.31, down from $66.54 last year. One-third of the consumers surveyed said the economy was going to affect their Halloween celebrations, and of those, 88% said they would spend less overall, 46.5% said they plan to purchase less candy, 5.3% said they won’t hand out candy at all, and 16.8% will nurture their creative side by making their own costumes.

Cash-strapped families adjusting to lower incomes and job losses will undoubtedly be scouring shelves for the best deals, so retailers are expected to offer bargains throughout the season.

http://www.latimes.com/business/la-fi-holiday-sales29-2009sep29,0,2658332.story?track=rss

Some economists are hopeful after observing a somewhat obscure economic indicator, which revealed that consumers are feeling more optimistic about the future: there’s been an upswing in recreational vehicle purchases.

Consumer confidence is expected to show modest improvement in a report being released today, but some economists see RV sales as a leading indicator of the economy’s health because they are among the largest nonessential purchases that a consumer can make.

Trailers cost between $6,000 and $60,000 and motor homes typically cost $50,000 to $300,000- no small chunk of change, but about 8% of U.S. households own one.

RV wholesale shipments increased 16% from July to August, and while that’s only about half the industry’s rapid sales pace in 2006, it’s still a 136% surge from January, according to the Recreational Vehicle Industry Association. The group estimates there will be a 27% increase in 2010.

http://www.usatoday.com/money/economy/2009-09-28-sales-recreational-vehicles_N.htm