Holiday Sales Report: No-Ho-Ho

Retailers Confirm Their Most Dismal Season In Decades

(CBS)  The already disappointing holiday shopping season turned out to be even more dismal than anyone anticipated.

The nation's retailers released weaker than expected sales figures Thursday, confirming that the just-ended season was the worst in decades. Even usually strong retailers such as Wal-Mart Stores Inc., Kohls Corp. and Target Corp. suffered amid economic uncertainty, a short season and a lack of must-have items.

Department stores and many mall-based apparel stores, particularly Talbots Inc. and AnnTaylor Stores Corp., also languished.

But there were some pleasant surprises: Resurgent Gap Inc. and J.C. Penney Co. Inc. extended their comeback. And teen retailers Hot Topic Inc. and Pacific Sunwear of California Inc. whose results at stores opened at least a year, known as same-store sales, well exceeded Wall Street's expectations.

Same-store sales are considered the best indicator of a retailer's health.

Throughout December, many of the nation's merchants were continually reducing their sales targets and predicting disappointing sales for the season, but Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. was surprised at how widespread the declines were.

"This certainly can be characterized as a weak season," said Niemira, noting that 51 percent of the 82 stores he tracks registered sales declines in December.

The company's same-store sales tally was up only 1 percent for December, far below his estimate of 2 percent to 2.5 percent.

That means that same-store sales for the combined November and December period, which accounts for almost 25 percent of retailers' annual revenues, rose only 0.5 percent. That confirms that the holiday 2002 season is the weakest since at least 1970, when the index began to track same-stores sales data.

Niemira and other analysts don't believe consumer spending will improve in the short-term.

"I think in the near term, there will be a continuation of a struggle in the retail industry," said Niemira, noting that the possibility of war in Iraq and the nation's shaky economy will remain obstacles this year.

The disappointing news from merchants followed a more upbeat announcement by the Labor Department that new claims for unemployment benefits dipped last week, a sign that layoffs may be leveling.

For the work week ending, Jan. 4, jobless claims fell by a seasonally adjusted 19,000 to 389,000, the lowest level since Dec. 21. The decline came after new applications for unemployment benefits increased by 19,000 the week before.

Still, analysts say consumers are nervous about their jobs, and consequently will continue to scour stores for the best deal.

"There is still a great deal of conservatism among consumers," said Gregg Clark, vice president of retail at Cap Gemini Ernst & Young.

Gap, whose business started to recover in October following a prolonged slump, did surprisingly well with a 5 percent gain in same-store sales. That beat Wall Street expectations of a 3.6 percent increase.

Total sales were up 10 percent.

Wal-Mart reported same-store sales were up 2.3 percent, below Wall Street's already reduced estimate of a 2.6 percent gain. Last month, Wal-Mart had earlier pulled back from its projection of a same-store sales increase of 3 percent to 5 percent for December.

Total sales were up 9.5 percent. The discounter said inventory is at slightly higher levels than the company would like but is still manageable.

Target said same-store sales were down 0.3 percent, in line with reduced Wall Street expectations for a 0.4 percent decrease. The results were well below Target's original projection of a 3 percent to 5 percent gain.

Total sales at Target were up 7.6 percent.

Kohl's reported a modest 3.3 percent same-store sales gain in December, far below the 6 percent increase Wall Street anticipated. Total sales were up 19.4 percent.

Here are selected same-store sales for December for other leading retailers:

AnnTaylor, same-store sales were down 14.6 percent; total sales declined 7.8 percent.

Federated Department Stores Inc., same-store sales slipped 2.6 percent; total sales were down 0.8 percent.

Hot Topic, same-store sales were up 10.6 percent; total sales increased 36 percent.

Pacific Sunwear of California, same-store sales gained 16.1 percent; total sales were up 28.7 percent.

Penney, same-store sales at department stores were up 4.7 percent; total sales were up 0.6 percent.

Limited Brands, same-store sales were unchanged; total sales were up 4 percent.

Sears, Roebuck and Co., same-store domestic sales were down 4.6 percent; total sales declined 2.6 percent.

Talbots, same-store sales were down 9.1 percent; total sales decreased 3 percent.