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Retailers report disappointing Dec. sales

NEW YORK - An already disappointing holiday shopping season turned out to be even worse than expected for many of the nation's retailers, who Thursday reported tepid sales gains for December.

The downbeat results came from merchants in all retail categories, from Limited Brands Inc. to jewelry chain Zale Corp. But Wal-Mart Stores Inc. posted better-than-expected results for December following a dismal November, but the discounter's overall holiday season was the worst on record, analysts said.

Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass., said retailers were forced to mark down heavily to bring in sales.

''Clearly, this was a promotional Christmas,'' he said. ''Consumers clearly waited until the last minute.''

Such aggressive discounting led a number of merchants including Zale, BJ's Wholesale Club Inc., Gap Inc. and AnnTaylor Stores Corp. to cut their profit outlooks.

After a solid start to the holiday season, many stores struggled with disappointing business in December, and a shopping surge in the days just before and after Christmas wasn't strong enough to make up for lost sales. Merchants tried to stick to their previously planned discounts, but at the season's end they resorted to bigger-than-anticipated cuts to pull shoppers in.

Mild weather across much of the country meant consumers were in no hurry to buy cold weather wear such as coats and gloves, depressing sales at many apparel stores. Declining gasoline prices and a steady job market should have helped merchants, but Perkins believes the recent drop in home equity loans - a big source of buying power over the past few years - curtailed spending among middle-income shoppers.

Sales results were also hurt by two big shifts in the way consumers are shopping: the increasing popularity of gift cards and robust online buying, which is not included in same-store results. Gift card sales are only posted when they are redeemed rather than bought, helping to extend the holiday season into January.

Wal-Mart, which warned earlier in the season that its sales gain from stores open at least a year would be no better than 1 percent, posted a 1.6 percent for December. Retail industry analysts polled by Thomson Financial expected 1 percent gain.

Sales from stores open at least a year, known as same-store sales are sales, are considered the industry standard for measuring a retailer's health.

The results followed Wal-Mart's 0.1 percent decline in same-store sales in November, its first monthly same-store sales drop in a decade.

Last month's sales figure was the company's weakest December performance since 2000 when Wal-Mart posted a 0.3 percent gain, according to Thomson Financial. The slim 0.8 percent increase for November and December combined was the worst since Thomson Financial began tracking same-store sales data in 1995.

Wal-Mart has struggled with a mix of problems, including the fact that its lower-income customers were hurt by soaring gas prices. But the company's lackluster sales have persisted even as the cost of gas retreated - partly because its attempt to broaden its appeal to higher-income shoppers was poorly executed, particularly in apparel and home furnishings.

Wal-Mart reported Thursday that it had a strong performance in electronics and the grocery business in December.

Rival discounter Target Corp. had a 4.1 percent gain in same-store sales, below the 4.5 percent estimate.