December sales results weak

NEW YORK — If anyone is looking for signs that the U.S. may be headed into a recession, look no further than the dismal December sales results turned in by the nation's retailers.

Many merchants who reported sales figures Thursday failed to meet already lowered sales projections, making this the weakest holiday season since 2002. Their performance led a string of stores to reduce earnings outlooks for the fourth quarter.

The weak results crossed all retail categories. Particularly hard-hit were apparel sellers, including Limited Brands Inc. and AnnTaylor Stores Corp., as well as department stores including Macy's Inc. Among the few bright spots were low-price operators like Wal-Mart Stores Inc., which posted results that exceeded Wall Street expectations, as it benefited from shoppers trading down to cheaper stores amid higher gas prices and a slumping housing market.

"Overall, the holiday season was dismal," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "Consumers are definitely feeling the pain."

Such sluggish holiday results are expected to force retailers to cut inventory, reduce store personnel and shutter stores.

"We are in a period of atonement," said John Morris, Wachovia Capital Markets LLC. "Retailers are going to try a cleaner way of living. They are going to be on the defense."

That strategy contrasts with the mood of the past few years, when stores experimented with different store concepts to try to fuel sales growth.

A number of chains including Macy's and Target Corp. saw their sales depressed in December in part by a quirk in the calendar, which pushed the post-Thanksgiving shopping week into November rather than December. Analysts say it is best to look at the combined November-December figures to get a better picture.

Still, it was clear the slowing economy made shoppers frugal during the holiday shopping season. Lured by fat discounts, shoppers jammed stores over Thanksgiving weekend, the start of the holiday shopping season, but they didn't return until the final days before Dec. 25, when stores were stepping up their promotions and the discounts were even deeper. December sales results also got some lift from post-Christmas shopping, as consumers bought holiday leftovers. Such late buying cut into profits, according to analysts.