Grim Forecasts for Yule Sales Proving Correct

Predictions of a dismal Christmas shopping season are so far proving correct as some of the nation’s biggest retailers said today their sales fell in November from levels of a year earlier.

Consumers, shaken by the faltering economy and the uncertain outlook in the Middle East, clamped down on holiday spending even during the Thanksgiving weekend, traditionally one of the most popular shopping periods in the year.

“We’re seeing the consumer retrenching, worrying about higher gasoline prices, higher inflation, lower employment,” said Walter Loeb, a retail analyst and consultant.

Jeffrey Feiner, an analyst with Merrill Lynch & Co., called November sales “extremely disappointing and even below our generally conservative expectations.”

Department stores and general merchandise retailers like Sears, Roebuck & Co. bore the brunt of November’s dismal results.

Sears, the nation’s largest retailer, said sales at stores open at least a year fell 2.4%, while the company’s overall sales dropped 1.6%.

J. C. Penney Co. said same-store sales dropped 4.6%, while overall sales slipped 3.1%.

May Department Stores Co. suffered a 5% drop in same-store sales as its overall sales fell 0.2%.

Discount retailers fared somewhat better, indicating that many consumers are buying cheaper gifts this year.

But even Wal-Mart Stores Inc., which consistently outperforms the rest of the industry, saw sales lag. Wal-Mart reported that its same-store sales were up 7%, below the discount retailer’s usual double-digit increase, while overall sales were up 22%.

Retailers expect to do most of their business in the last 10 days before Christmas, but analysts believe that even a last-minute surge will not be enough to offset the industry’s weak performance since Thanksgiving.

“Unless a very quick solution to the Mideast were to occur, consumer confidence will remain extremely weak,” Feiner said.