business

Consumers continued to keep a wary watch over their wallets in November, as Black Friday crowds weren't enough to pull the nation's stores out of their doldrums.

Retail sales fell 0.3 percent last month, according to data released Thursday by the International Council of Shopping Centers (ICSC), creating doubts that merchants will be able to escape profit-eating discounts for the holidays.

The disappointing national results reverse two consecutive months of gains and provide more evidence of how fragile the economy remains despite early signs of a recovery.

"Anything that's marked down is moving," said Sanjay Srikanth, a partner with global consulting firm A.T. Kearney. "If a retailer doesn't have a very, very clear value orientation, it's a difficult environment."

Consumers have been slow to get their holiday shopping underway, and warmer-than-usual weather meant that consumers didn't bulk up their closets with new sweaters and coats, according to the ICSC, which compiles data on 32 of the nation's biggest publicly traded chain stores.

But ICSC's chief economist, Michael Niemira, predicts that procrastination will soon come to an end as consumers get busy on their gift lists in the countdown to Christmas.

Retailers can earn as much as 40 percent of their annual sales and profits during the holiday season. Yet as November's sales show, luring in the increasingly frugal consumer continues to pose challenges.

Black Friday, that dawn-after-Thanksgiving bargain-snatching bonanza, drew more shoppers this year than last, according to the National Retail Federation, but consumers spent about 8 percent less during the weekend, or $343.31 each. Whether buying for themselves or others, shoppers continued a practical streak, snapping up dishes and housewares, boots and flat-panel televisions at deep discounts.

Three-quarters of retailers missed expectations in November, according to research from Ken Perkins of Retail Metrics. His data showed that retailers eked out a 0.7 percent increase, but Perkins noted in a grim report it "does not bode well for holiday sales."

Minneapolis-based Target Corp. said combined sales at its stores and website were down 1.5 percent compared to last year's plunge of 10.5 percent. Analysts had expected a 0.5 percent dip at Target.

"Sales were slightly below our expectations," CEO Gregg Steinhafel said in a statement, despite Black Friday business that was up in the high single digits compared to last year. Saturday sales were less robust, Steinhafel said, but electronics, toys and clothing were among the most popular items during the weekend.

For the month, Target sales remained strongest for necessities, such as food, health care and beauty products. Clothing sales fell in the mid-single digits.

Target expects December sales will be in line with November's.

While discount stores have outperformed other retailers during the recession, November posed a challenge for nearly all of them except at T.J. Maxx (same-store sales up 8 percent) and Ross (up 9 percent).

Costco Wholesale Corp. posted a 6 percent rise, but said U.S. sales were essentially flat after excluding higher gasoline prices and a favorable foreign exchange rate. Same-store sales are a key measure of a retailer's health because it compares performance among stores open at least a year, eliminating the boost from new stores.

Teen retailers had the worst month of any retail segment, down 5.7 percent as a group, according to Retail Metrics.

Except for Kohl's, which far exceeded expectations, department stores were stung in November. Macy's same-store sales fell 6.1 percent, and J.C. Penney fell 5.9 percent. Kohl's, based in Menomonee Falls, Wisc., posted a 3.3 percent increase, after falling 17.5 percent a year ago.

Thursday's figures don't include online sales for many stores. The tally also doesn't count two major players -- Wal-Mart, the world's largest retailer, and Richfield-based Best Buy, the nation's No. 1 consumer electronics retailer -- because neither releases monthly sales results. With electronics proving to be an early Black Friday winner and online traffic up significantly, analysts suspect November may not have been so dreary.

A report from MasterCard Advisors' Spending Pulse, which estimates purchases made with all credit cards as well as cash and checks, showed evidence of the "urge to splurge" some analysts have been talking about in recent months. Sales of jewelry ticked up 4.6 percent over last November, yet luxury spending excluding jewelry dropped 7.3 percent, the first drop since August.

Clothing retailers are in an "interesting and tricky position now," Srikanth said. They've got their inventory under control and are doing their best to avoid deep markdowns with an urgent "buy now before it's too late" message.

"They're in a cycle where they're trying to retrain the consumer" not to wait for discounts, Srikanth said. "It's a question of who's going to blink first."

Jackie Crosby • 612-673-7335