Here's a sign of how shaky the economy has become: Wal-Mart Stores Inc. says that its shoppers are redeeming their holiday gift cards for basic items -- pasta sauce, diapers, laundry detergent -- instead of iPods or DVDs.
Merchants had hoped that consumers armed with gift cards would provide a lift after a dismal holiday shopping season -- partly because shoppers tend to spend even more than the value of the cards, once they're in the stores. But that didn't seem to happen last month, and retailers are feeling the pain.
On Thursday, the nation's retailers turned in their worst January in almost four decades, as high fuel and food prices, a slumping housing market, tighter credit and a tougher job market pushed consumers to the edge.
The world's largest retailer had been expected to have one of the stronger showings in January, but its sales gain came in under analysts' estimates. The company said that it continues to do well with staples such as groceries, but that home furnishings remain weak.
The Minneapolis-based discounter said customers spent more, but that there were fewer of them, resulting in a decline just greater than analysts had expected. Health care, consumables, perishables and sporting goods sold well; lawn and garden, jewelry accessories and stationery didn't.
The Wisconsin-based department store chain posted a decline worse than analysts had expected. The retailer also said it now expected fourth-quarter earnings to come in at the low end of its previous forecast.
The warehouse-club chain was one of the month's few bright spots, surpassing the estimate of analysts. Warehouse clubs, where members pay an annual fee to qualify for discounts, have prospered as consumers coping with $3-a-gallon gasoline and declining home prices have pared spending.
FROM NEWS SERVICES