Retail sales reports for holidays bad as predicted

December may have been a bargain hunter's paradise, but consumers were on vacation from spending, leaving the nation's retailers with sales declines and poor profit margins.

Same-store sales of all U.S. chain stores fell 1.7 percent during the month compared with a year ago, the International Council of Shopping Centers reported Thursday, confirming predictions of the worst holiday shopping season in decades.

When including November sales and the busy Black Friday and Thanksgiving weekend, sales during the two-month holiday season fell 2.2 percent. Retailers often post between 25 and 40 percent of their annual sales during November and December.

Even Wal-Mart Stores Inc., the retail star in recent months, missed Wall Street's expectations. It posted a modest 1.9 percent gain in same-store sales, including fuel, blaming winter storms and weak holiday sales at its Sam's Club division.

"Bleak" is how Retail Metrics President Ken Perkins summed up December's results. In all, 71 percent of retail chains reported negative sales, he said.

"With Wal-Mart missing expectations, that's an ominous sign of the pain the lower- and middle-income consumer is feeling right now," Perkins said. "And there doesn't appear to be any catalyst on the horizon for consumers to go out and spend, even if they have the means."

Sales at Macy's fell 4 percent in December, and the company announced it would close 11 department stores nationwide, including its store at Brookdale Center in Brooklyn Park. Macy's, which operates 840 stores, also cut its fourth-quarter and annual earnings outlook.

Double-digit losses

Many mall-based chains posted double-digit drops: Sales at Abercrombie & Fitch plunged 24 percent; the Gap was down 14 percent. Department store Saks sank nearly 20 percent.

Target's sales trends reflected the overall economy, with bright spots in necessities, and lulls in discretionary purchases. The company reported moderate growth in food and upper-single-digit growth in health care items. Clothing and home decorations declined in the high-single digits.

Target expects sales to continue to lag in January, with a decline in the mid-single digits. It didn't provide forecasts beyond this month.

"[Retailers] who were surprised by poor December sales weren't paying attention," said Ron Wince, CEO of Mesa, Ariz.-based Guidon, which works with retailers to help their operations become more efficient.

"One thing retailers are starting to realize now -- after squeezing their supply chain and looking at various other factors to cut costs for years -- is the customer experience," he said. "If they can make shopping more efficient and enjoyable for the customer, they're more likely to come back in good times and in bad."

Perkins sees dark recessionary clouds hanging over the retail landscape for months to come, unless stimulus checks get cut or new jobs are created to put cash in consumers' pockets. Easter, Mother's Day and Father's Day may offer a "blip," he said, but he doesn't foresee a lift in the outlook until the back-to-school season.

"Retailers need to figure out how to drive traffic without putting up '70 percent off' signs," he said. "You really don't want to get into a vicious cycle of training consumers to look for signs of 50 percent off, or more, to get them into stores."