Holiday sales disappoint retailers
— -- The holiday season for most retailers turned out even bleaker than many feared, as worsening economic conditions caused many consumers to cut back on discretionary spending and insist upon deep discounting.
Overall retail sales last month for the 50 retailers reporting their numbers Thursday rose only 0.2% from December 2006, said consulting and market research firm TNS Retail Forward.
"The retail numbers leave little doubt that shoppers are in belt-tightening mode," said Retail Forward senior economist Frank Badillo. "No part of retail spending is immune right now."
A full week of post-Thanksgiving shopping in November also contributed to slower December sales, prompting some retailers to report sales for November and December.
"Despite higher seasonal promotions prior to Christmas, the two weeks before Christmas were the weakest at most retailers as promotions weren't enough to spark buying," says retail analyst Christine Chen of Needham & Co.
•Wal-Mart sales for the five-week period ended Jan. 4 were up 2.4% over last year. The world's largest retailer said brisk sales in grocery, pharmacy and electronics offset slower sales in clothing and home goods.
•Macy's sales for the same five-week period dropped 7.9%, which CEO Terry Lundgren said was because "macroeconomic trends led customers to spend cautiously for the holiday." He noted that when November and December were combined, same-store sales were up 1.1%.
"After a strong November, we had hoped that a more positive sales trend would continue through December," he said.
•Women's clothing stores struggled too. Ann Taylor's sales fell 9.4%, considerably worse than the 1.4% decrease forecast by analysts. Sales for Chico's, which also owns White House/Black Market, were down 13.7%, also worse than analysts were predicting. CEO Scott Edmonds acknowledged the results "fell well short of our expectations" and blamed the need to do more promotions and take higher markdowns than expected.
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