Holiday Sales Down 2.2 Percent

As retail holiday sales reports came in, it became more or less official that the word for the year was “dismal.”

The weak economy, rising unemployment, winter storms and what the New York Times called “a dearth of compelling fashions” hurt all kinds of retailers in December. This week, many reported double-digit sales declines at stores open at least a year, a measure known as same-store sales and a barometer of retail health.

Industry sales fell 2.2 percent for the holiday shopping season, the biggest decline since at least 1970, according to the International Council of Shopping Centers. December sales dropped 1.7 percent on top of even-weaker November sales, when chains posted a 2.7 percent decline, the ICSC said. Those numbers would be worse except for certain categories, like food and beverages.

Retailers like Saks Fifth Avenue, Nordstrom, Macy’s, Target, Gap, J. Crew, Pacific Sunwear and Chico’s all reported that their margins had been hurt by their aggressive holiday promotions. Even Walmart missed analysts’ expectations and lowered its projection of future results, indicating more rocky months ahead. In December, Walmart had a 1.7 percent same-store sales increase, not including fuel, but it said it expected little improvement this month, with January same-store sales likely to be flat or 2 percent higher.

Department stores of all types, as well as many specialty apparel retailers, struggled. Same-store sales in the specialty retail stores segment of Neiman Marcus, which includes Neiman Marcus and Bergdorf Goodman stores, tumbled 31.2 percent. Sales at Saks sank 19.8 percent. At Nordstrom, sales were down 10.6 percent.

Sales at mall retailers also fell by double digits, including Abercrombie & Fitch (down 24 percent), American Eagle Outfitters (down 17 percent), Gap (down 14 percent), Wet Seal (down 12.5 percent), Chico’s (down 12.4), Zumiez (down 12.3 percent), and Limited Brands and Pacific Sunwear of California (both down 10 percent).

December sales fell 8.1 percent at J. C. Penney, 7.3 percent at the Sears Holdings Corp., 5.8 percent at Bon-Ton, 5 percent at Dillard’s and 1.4 percent at Kohl’s. Sales at TJX Cos., Ross Stores and Children’s Place Retail Stores were flat.

Some niche retailers did manage to rise above the gloom. Sales increased by double digits at teenage apparel retailers Buckle (up 13.5 percent) and Aeropostale (up 12 percent). Hot Topic — which tied merchandise into the hit teenage vampire film “Twilight” — had a 4.3 percent sales increase.

 
BJ’s Wholesale Club also fared well in December, with sales rising 5.9 percent, excluding fuel. But other discounters, like Target and Costco Wholesale, were softer, with sales down 4.1 and 4 percent, respectively.

All the bad news leads to more speculation than usual about possible retail bankruptcies. The number of retailers filing for bankruptcy protection surged in 2008, but the chains that filed — including Circuit City, KB Toys, Mervyns, Boscov’s, Steve & Barry’s and Sharper Image — were already weak. According to the Times, the next wave of filings is likely to include stores that are doing many things right but reeling from a high debt load in addition to a slowdown in sales brought on by the recession.