Retailers Fret Over Dreary Holiday Outlook

Concern That Miserable November Sales Could Carry Over Into December

(AP)  Retailers who suffered through a miserable November - despite a surge in sales the day after Thanksgiving - are worried that the usual lull between the holiday weekend and the final days before Christmas could be dangerously quiet this year.

With financially squeezed shoppers holding out for even better deals or are simply already done, retailers who are already offering deep discounts will likely be forced to be even more aggressive as they lurch through a season looking to be the weakest in at least 30 years.

Worries about the holiday season increased Thursday after many retailers - with Wal-Mart the notable exception - reported November sales so dismal it was the industry's worst month since at least 1969. The malaise cut across all sectors as shoppers worried about layoffs and shrinking retirement funds and focused on necessities.

"It's an awful beginning to the holiday season," said Michael P. Niemira, chief economist at the International Council of Shopping Centers. "This is going to be a difficult holiday season for most retailers. There are going to be more bankruptcies." He predicted that the retrenchment in spending will linger for at least another six months.

Based on conversations with stores, this week's sales have been slower than expected, said Janet Hoffman, managing partner of the North American retail practice of Accenture. And with five fewer days between Thanksgiving and Christmas this year, retailers are under more pressure to make every day count.

Karen MacDonald, a spokeswoman at mall operator Taubman Centers Inc., said that stores are being more aggressive with discounting for this coming weekend compared with a year ago.

In recent years, shoppers have been increasingly delaying their holiday shopping to the final days before Christmas for better bargains, but analysts say they believe this year people just can't afford to spend more. C. Britt Beemer, chairman of America's Research Group, notes a higher percentage of shoppers he's surveyed had completed their holiday buying on Friday compared with a year ago.

"If retailers are not super aggressive with discounts, stores will be retail museums," said Beemer, who expects the lull will be more pronounced this year.

Worries about the economy have helped Wal-Mart, which reported a 3.4 percent gain in same-store sales, surpassing the 2.1 percent increase that analysts surveyed by Thomson Reuters expected. The results excluded sales from fuel.

Wal-Mart added that business is starting to benefit from falling gas prices, noting that shopping trips increased and "customers had more discretionary income to spend." It expects same-store sales growth for December to be at the high end of its range of 1 to 3 percent.

However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected 5 percent drop in same-store sales. Target Corp., which has been stumbling as its merchandise focuses more on nonessentials like trendy clothes, reported a 10.4 percent drop. And most mall-based chains and department stores fared even worse, with Abercrombie & Fitch Co., Nordstrom Inc., and Kohl's Corp. reporting percentage declines exceeding 15 percent.

Same-store sales are sales at stores open at least a year and are considered a key indicator of a retailer's health.

According to the Goldman Sachs-International Council of Shopping Centers index, same-store sales dropped 2.7 percent for November, making it the worst month since at least 1969 when the index began. November's results were even more miserable than the 1 percent drop that Niemira anticipated. Excluding Wal-Mart, the index declined 7.7 percent, indicating a widening gap between the world's largest retailer and the rest of the merchants.

Niemira is slashing his holiday same-store sales forecast for the combined November and December periods to be down as much as 1 percent. The only holiday period that was almost as weak was 2002, which posted a meager 0.5 percent same-store sales gain.

Sales data from Thanksgiving weekend showed a buying binge on Friday, but shoppers retreated the rest of the weekend. And even at stores on Friday, people focused on bargains and on small-ticket purchases as they slash their holiday budgets.

"Shopping was incredibly functional," said Wendy Liebmann, president of WSL Strategic Retail, retail consulting company. "There was no pleasure or joy."

Web retailers, which have seen their sales slow in the deteriorating economy, posted a 15 percent sales gain for the Monday after Thanksgiving - the unofficial start for cyber shopping, according to comScore Inc., an Internet research company. But that gain was fueled by a 22 percent increase in the number of buyers, who spent on average 5 percent less compared with a year ago.

Many stores blamed their weak November figures in part to the quirk in the calendar of the late Thanksgiving. Niemira estimated that factor depressed November figures - and will benefit December - by 1.5 percentage points to 2.0 percentage points.

[omnibus66]

People are losing jobs, their retirement accounts are disappearing, the country is in an economic recession, and the whole country is is suffering mental depression.

First they told us that Black Friday was ''great'', and now they are saying that November sales were ''miserable''. It now seems that Wal-Mart, aka ''China R Us'', is the only one with increased sales.

Four years ago, bumper stickers were pleading to let Bush/Cheney ''finish the job they started''. Well, they finished it all right, and it looks like they will leave office with ''mission accomplished'', that mission being to destroy this country.

[wl7bzh]

You mean Christmas isn''t about gifts and food with a day off? If sales are down, what will Christmas be like this year.

Whatta ya'' mean we haven''t had Christmas in years? Oh,it''s been changed to "Happy Holiday"?

Silly me, if that''s all it was then what was the point? Oh, the merchants needed it to survive?!

Gosh, that was dumb on the merchants part-to continue to expect people to go on a massive yearly spending spree just so they could survive.

Well in the spirit of the season-to all you merchants struggling to get buy..UH...sell.
-HAPPY HOLIDAYS!!!!

[shanev137]

I thought sales were 18% better than last year at this time?

[whitemale08]

Consumerism has DIED!!!

Which means everybody ''get back to work...real work'' like making things and building things and invest in projects that benifit mankind around the planet.

Not for Wall Street or the City of London to make a profit but for human beings to make their lives better.