Stores Report Holiday Season Of Letdowns

Deb Stunkard shops at a Pennsylvania Wal-Mart. The national retailer posted better-than-expected sales last month. (By Gene J. Puskar -- Associated Press)

Retailers are like little kids when it comes to the holidays: They always hope it will be perfect, and they are always disappointed.

Though a full picture of the busiest shopping season of the year won't emerge until later this month when the Commerce Department publishes its tally of December sales, results from more than 40 national chains released yesterday offered a window into what it might look like -- and, for the most part, it fell short of what retailers hoped for.

The International Council of Shopping Centers, a trade group, estimated that December sales at stores open at least a year -- known as comparable or same-store sales -- grew 3.1 percent from 2005. Although that means retailers took in more money, the figure is lower than the growth of 3.6 percent in December 2005. And that makes retailers and investors moody.

Industry experts blamed this season's warm weather as one of the factors limiting growth. They also pointed fingers at procrastinating customers; unplanned markdowns; and gift cards, which stores can't count as sales until they are redeemed.

"More so than in past seasons, this holiday season came down to the week before Christmas," said Michael P. Niemira, chief economist for the ICSC.

Catalogue sales were not counted in the tally, and neither was online shopping, which was bountiful, reaching $24.6 billion in November and December, according to ComScore Networks, a market research firm. That was a 26 percent increase over 2005. Online spending for the entire year hit more than $100 billion for the first time. The busiest day of the year was Dec. 13, when online retailers did $666.9 million in sales, ComScore found.

That gave Gian Fulgoni, ComScore chairman, a rosy view of the season.

"The online holiday shopping season of course played a vital role in the year's success," he said.

But at clothing chains, same-store sales fell by 0.9 percent last month compared with the previous year. The stores made up the only chain retail sector to experience a decline, according to an estimate by the ICSC. The trade group said December was the warmest in five years, hurting clothing sales.

Gap reported one of the industry's largest comparable-sales declines last month, falling 8 percent and leading it to revise its earnings estimate for the year. The retailer said it had to mark down merchandise because of slow store traffic, eating into profit.

"We are clearly disappointed," said chief executive Paul Pressler.

Same-store sales also declined by single-digit percentages last month at teen retailers Abercrombie & Fitch, Hot Topic and Pacific Sunwear and at women's stores Ann Taylor and Chico's FAS. Others, such as Bebe, Limited Brands and Children's Place, posted sales growth but failed to meet analysts' expectations. The notable exception was children's clothing chain Gymboree, where comparable-store sales skyrocketed 15 percent thanks to new marketing and merchandising efforts, the company said.