Disappointing Season for Retailers

Wal-Mart Stores Inc. and Federated Department Stores Inc. said Monday that post-Christmas sales weren’t strong enough to cushion the worst holiday shopping season in more than three decades.

Wal-Mart, the world’s largest chain store operator, said sales at stores open at least a year rose as little as 2%, the low end of its forecast of a gain of 2% to 3%.

Results for the November-December holiday period at Macy’s and Bloomingdale’s Cincinnati-based parent, Federated, will fall about 4.5%, a steeper decline than expected. J.C. Penney Co. said same-store sales at its department stores rose 4.5% in December.

Discount retailer Target Corp., also said same-store sales were above expectations last week but were not strong enough to offset disappointing December sales.

Low prices on such items as DVD players and apparel probably didn’t attract enough consumers concerned about job cuts to make up for disappointing sales in the weeks before Dec. 25. A small sales gain at Wal-Mart probably foretells poor results at other merchants, investors said.

“If they’re etching out 2% to 3%, you can bet that the rest of the industry is below that,” said Charles Stutenroth, who helps manage about $26 billion at Fort Washington Investment Advisors Inc., which holds Wal-Mart and Federated shares.

General merchandise, apparel and furniture sales for the week ended Saturday fell 9.4% from the previous week, said ShopperTrak RCT, a Chicago-based firm that tracks data from more than 30,000 retail stores. Total sales will rise 1% in December, the smallest year-over-year monthly gain since September 2001, when the terrorist attacks affected consumer spending, ShopperTrak said.

“We expect sales and profit warnings over the coming weeks,” said Merrill Lynch retail analyst Dan Barry.

He added that despite big promotions, deep discounts and a bump in post-holiday sales from shoppers with gift certificates, “it was not enough to save Christmas sales this year.”

Shares of Wal-Mart rose $1.48, or 3%, to $50.64, while Federated shares rose 56 cents to close at $28.08. Both stocks trade on the New York Stock Exchange.

Wal-Mart last week lowered its forecast for the five weeks ending Friday from an estimated increase of as much as 5% after reviewing sales through Christmas Eve. Post-holiday clearance sales and gift certificates helped keep results from slipping further, investors said.

“It was not a decisive victory, yet we avoided the worst outcome,” said Martin Bukoll, an analyst at Northern Trust Corp., whose $320 billion in assets include Wal-Mart shares.

This would be the fifth month out of six that sales results came in below, or at the low end of, the Bentonville, Ark.-based retailer’s initial forecasts.

On Monday, Salomon Smith Barney cut its fourth-quarter profit estimate for Federated to $1.93 a share from $1.95.