• by Sarah Mahoney  @mahoney_sarah, December 26, 2008

Just as MasterCard reported some of the worst holiday retail sales in recent memory, the largest chains took a buzz saw to already drastically reduced merchandise, continuing the Christmas carnage.

MasterCard's SpendingPulse says that retail sales (excluding autos) fell 5.5% in November and 8% in December, through Christmas Eve. Excluding gasoline, the declines are less severe--off 2% from the prior year in November and 4% in December, through the 24th. "A difficult economic environment combined with unfavorable weather during the last week of shopping made 2008 one of the most challenging holiday shopping seasons in decades," it says in its report.

The biggest nosedive came in the luxury sector with sales of high-end products, including jewelry, tumbling 35% in the combined November and December period compared to year-ago figures--followed by consumer electronics and appliances, down 27%; women's clothing, off 23%; furniture, down 20%; men's duds, down 14.3%, and footwear, down 14%. Even online sales fell, slipping 2.3% in the holiday period. SpendingPulse is a macroeconomic indicator that estimates for national retail sales across all payment forms, including check and cash.

Some companies definitely bucked the trend, and Amazon is declaring itself a winner. It says it posted the best holiday in its 14-year history, with more than 6.3 million items ordered worldwide on its peak day, Dec. 15 (or about 72.9 items per second). Top sellers included Razor scooters, Nintendo Wii, and Eyeclops night vision stealth goggles.

But most retailers have nothing to brag about except more discounts. JCPenney, for example, opened its doors at 5:30 a.m. the day after Christmas--the earliest ever, with 100 door busters--more than double last year's offerings. (The company even offered to wake shoppers up--those who registered by Dec. 23 got a wake-up call to their cell phone Friday.)

Sears also made steep cuts at both its flagship Sears stores and Kmart. In addition to a 7 a.m. opening, the store is offering 75% off some electronics and Craftsman tools, as well as clothing. And Kohl's, open at 6 a.m., was advertising additional reductions of 60% to 70%.