It's Official: Consumers Are Sucking It In

Retailers turned in December sales reports that were somewhat more disappointing than expected. And experts say the results don't just sum up a lousy holiday period--they're predictive of a newly cautious consumer.

Middle-of-the-road department stores were hit hardest, with Kohl's same-store sales falling 11.4 %, Macy's sliding 7.9%, and JCPenney dipping 7.5%. Even high-end luxury stores, which have been strong performers, struggled: Nordstrom says its sales fell 4%, and Saks eked out a gain of 0.8%. (Same-store sales at Neiman Marcus posted a 2.9% gain.)

Specialty apparel retailers are also wrestling with much weaker numbers. Same-store sales at Chico's sank 13.7%; sales at the Limited Brands, which includes Victoria's Secret and Bath and Body Works, fell 8%; and at the Gap, which includes Old Navy and Banana Republic, as well as Gap stores, sales slid 6%.

For teen retailers, Aeropostale was a standout with a 12.2% gain, but sales at both Abercrombie & Fitch and American Eagle Outfitters fell 2%, and sales at Hot Topic dropped 6.2%.



Wal-Mart was an unexpected bright spot, posting a comparable-store gain of 2.7% at the higher end of its forecast. But Target, just a day after announcing the retirement of its CEO, says its same-store sales dropped 5% in December.

Overall, December same-store sales growth managed a gain of just 0.2% from the prior month and last year, according to TNS Retail Forward, a Columbus, Ohio-based consultant that tracks about 50 key retailers.

To a degree, the weather was a major factor, says Weather Trends International. "This five-week retail calendar (Dec. 2-Jan. 5) was the third-coldest in 15 years and the snowiest in seven years," it says, "bringing major disruptions to the critical holiday shopping season."

But the real villain seems to be the economy. "The retail numbers leave little doubt that shoppers are in belt-tightening mode," TNS Retail Forward says in releasing its index. "No part of retail spending is immune right now. From stores to online retailers and lower-income to higher-income shoppers, there are signs of weakness that will persist into 2008."

Shoppers included in its ShopperScape survey, fielded in the week between Christmas and New Year's, say they spent $635 on average this year, compared with $710 last year. Fewer shoppers (82% versus 88% last year) say they shopped online for gifts, and the percentage of online purchasers also declined a bit, to 77% from 80%.

Gift cards, which retailers count on to spur January sales, also disappointed. About 56% in the ShopperScape survey say they received cards, compared with 58% a year ago. And the average amount on the cards declined, too--to $124, from $136 last year.

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