December retail sales are weakest since 1969

Tom Lucet of Beverly, Mass., takes a solitary break in the Liberty Tree Mall in Danvers, Mass., where clothing retailer Steve & Barry's, a victim of the sour economy, holds a going-out-of-business sale.

Winslow Townson / AP

Tom Lucet of Beverly, Mass., takes a solitary break in the Liberty Tree Mall in Danvers, Mass., where clothing retailer Steve & Barry's, a victim of the sour economy, holds a going-out-of-business sale.

NEW YORK - Retailers reported dismal sales figures for December yesterday as even Wal-Mart Stores Inc., one of the bright spots in the industry, finally buckled under the pressures of the deteriorating economy.

As the figures confirmed fears that the holiday season was the weakest since at least 1969, the malaise cut through practically all areas, including kitchen gadget stores, jewelry purveyors, and teen apparel retailers.

Generations Menswear store in New York City, perhaps fearing the worst is coming, holds an 'early bird depression sale.'

The deep discounts that began well before the official start of the holiday season spurred a number of merchants to cut their earnings outlooks, fueling more concerns about the health of the industry.

Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc., and Gap Inc. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted a smaller sales gain than what Wall Street expected and cut its fourth-quarter earnings outlook.

"This suggests that the lower-income group is feeling the pinch more than we thought, and this is clearly reflected in the lower-than-expected numbers at Wal-Mart," said Ken Perkins, president of research company RetailMetrics LLC. "I think it says the economy is in more dire straits than we thought."

The International Council of Shopping Centers-Goldman Sachs same-store sales tally dropped 1.7 percent for December, worse than the reduced estimate for a 1 percent decline. That means that same-store sales for the November-December period dropped 2.2 percent, making it the weakest holiday period since at least 1969, when the index began.

For the calendar year, retail sales rose on average a modest 1 percent, the weakest year since at least 1970, said Michael P. Niemira, chief economist at the shopping center trade group. The tally is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer's health.

Wal-Mart, blaming the weak economy and severe winter conditions, said that same-store sales rose 1.2 percent. Excluding the impact of declining gasoline prices at the pump, the gain was 1.7 percent. Analysts surveyed by Thomson Reuters had expected a 2.8 percent increase, excluding fuel.

The firm said it now expects to earn 91 cents to 94 cents a share in the fourth quarter from continuing operations. That's down from its previous projected range of $1.03 to $1.07 a share. Analysts surveyed by Thomson Reuters expected $1.06.

Discount rival Target Corp., which has been stumbling because its merchandise focuses more on nonessentials like trendy clothes, announced a 4.1 percent decline in same-store sales, better than the 9.1 percent drop that Wall Street analysts predicted.

Meanwhile, Costco Wholesale Corp. reported a 4 percent decline in same-store sales; Sears Holdings said its December same-store sales dropped 7.3 percent; and Macy's Inc. reported same-store sales fell 4 percent in December and 7.5 percent in the November-December period, which led to the company announcing it plans to close 11 underperforming stores (none in Ohio).

Same-store sales at J.C. Penney Co.fell 8.1 percent; Saks posted a 19.8 percent drop for December; and the Gap suffered a 14 percent drop .