Weather rains on holiday sales performance

CHICAGO — Rainstorms and unseasonably high temperatures for December throughout most of the country left many retailers looking for customers during the most crucial month of spending.

When the numbers are all tallied Thursday, most industry analysts and experts think this holiday-shopping period will be "anemic" — the description most often used — because shoppers held off on buying winter gear, procrastinated on holiday gift shopping and have yet to use gift cards.

"Those retailers waiting for the weather to break had a nail biter of a month," said Goldman Sachs analyst Adrianne Shapira.

The International Council of Shopping Centers is projecting that same-store sales, the industry's benchmark of growth measured by receipts rung up at stores open longer than a year, will rise at the low end of its 2.5 to 3.5 percent forecast.

Thomson Financial expects sales to rise 3 percent in December.

Wal-Mart Stores said Saturday that its same-store sales are likely to be higher by 1.6 percent.

It comes after Wal-Mart turned in its first sales decline in 10 years, down 0.1 percent, in November and may have come at the expense of profit margins.

Across the board, retailers stepped up promotions and discounts in hopes of clearing shelves and racks of winter coats, heavy sweaters and wool pants, all items that would have gone quickly if temperatures had fallen.

Even where there was 10 inches to 15 inches of snow, the hard-and-fast snowfall disrupted travel and retailing and swallowed potential sales.

Bear Stearns analyst Randal Konik took to the malls late last week, checking out 28 stores, representing 18 stocks, to get a handle on the level and depth of promotions.

He found a whopping 75 percent of the stores in a deep-discounting mode that wasn't in the works a year ago, while an additional 18 percent were "equally promotional" to last year.

The remaining 7 percent — which accounted for only two stores, The Limited and Hollister — were less promotional.

At Bebe stores, for example, the prices on most clothing, jewelry and accessories were marked down 50 percent, he said. A year ago, Bebe only slashed tags on jewelry and accessories by 30 percent.

And Old Navy stores touted a 50 percent-off-everything sale this season compared with last season's general post-Christmas sale that focused on markdowns on denim.

This season also was marked by extraordinarily big sales on big-screen TVs as the "family gift."

Translated into pocketbook terms, that meant the outlay for the high-definition TV took money away from individual gifts.

"With no must-have fashion items, consumer electronics — including flat-screen TVs, video-game consoles and computers — appeared to dominate the season," said Deutsche Bank analyst William Dreher.

The deep discounting hurt margins. The nation's two largest consumer-electronics retailers, Best Buy and Circuit City Stores, have warned that fourth-quarter results will be pressured.

Best Buy turned in weaker-than-expected third-quarter results, while Circuit City's swung to a loss.