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."
But some retailers were hit harder than others. Wal-Mart wmt fared better than Wall Street expected, while Macy's, mAnn Taylor annand American Eagle aeo did worse.
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.
•Some teen retailers, which are often more resilient during trying economic times, saw sales fall. American Eagle's sales were down 2%, while Hot Topic's dropped 6.2%. On the other hand, Aeropostale's same-store sales were up 12.2%, which "thrilled" CEO Julian Geiger.
"This was the convergence of so many things that have been nibbling around the edges for consumers and the retail industry," says Wendy Liebmann, CEO of consulting firm WSL Strategic Retail. "The economic issues have really made people rein in."
Liebmann, author of the biannual trends study, "How America Shops," says her research shows people have decided they "need to focus on essentials. They say, 'I can't control the big things so I have to control the little things.' "
Had the retail industry provided more must-haves this season, it might have been different, Liebmann says. "I can count on maybe three fingers things that were like that."