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TORONTO (Reuters) - Canadian retail sales grew by a tepid 1.6 percent in December, lagging even the disappointing gains posted in the United States, the month when holiday shopping peaks, according to data released by MasterCard on Wednesday.
Sales growth north of the border came in at less the half of the 4.3 percent rate that retailers delivered a year earlier, according to MasterCard's SpendingPulse, published by the payment company's research and consulting division.
The figure also fell short of growth in the United States, where sales rose 2.4 percent in December, capping off what analysts consider a lackluster holiday shopping season there.
The performance is bad news for Canadian retailers, already facing rising competition from U.S. chains expanding in Canada, and bracing themselves for the entry of Target Corp (TGT.N) in the spring. The arrival of the No. 2 U.S. discounter is expected to shake up the industry across Canada.
In December, MasterCard released data for November that showed only 1.3 percent sales growth, compared with 4.2 percent a year earlier.
In early January, Hudson's Bay Co (HBC.TO) said sales growth at its established department stores had slowed in the nine weeks to December 29. But an especially weak performance by the U.S.-based Lord & Taylor chain in wake of Superstorm Sandy pulled down the parent's overall result. Sales rose 6.7 percent at Hudson's established Canadian department stores.
At rival Sears Canada Inc SCC.TO, by contrast, same-store sales fell 5.8 percent in the nine weeks to December 29. Apparel retailer Reitmans Canada Ltd (RET.TO) showed a 2.4 percent decline for the same period.
The news was better in e-commerce, as online sales in Canada jumped 26 percent. MasterCard said the sector is growing more quickly than in the United States, where sales rose 12.6 percent.
To be sure, online retail has emerged more slowly in Canada. In some cases, if shoppers want to buy from a major retailer, they still must order from sellers based in the United States, contending with higher shipping costs and import duties.
Online sales were still a relatively small part of total sales, only 6.6 percent, but the segment has now grown more than 20 percent year-over-year for 15 consecutive months.
MasterCard said grocery sales were higher than average, compared with the month's sales over the last five years. Sales rose 1.3 percent, following a 1.9 percent gain last year. Gasoline sales fell 6.7 percent.
Reporting by Allison Martell; Editing by Frank McGurty and Bob Burgdorfer