It's finally official: The holiday shopping season was a disaster for the nation's retailers with Florida ranked among the states hardest hit by joblessness, deflated investment portfolios and frugal shoppers.
Confirming the gloomy news that has built for weeks, retailers reported dismal sales figures for December on Thursday as even Wal-Mart Stores Inc., one of the bright spots in the industry, finally buckled under the pressures of the deteriorating economy.
Overall, sales in stores open more than a year were down 1.7 percent for in December, making it the worst holiday season since the International Council of Shopping started tracking sales in 1969. Online retailers, once an industry darling, saw sales slip 4 percent during the fourth quarter, the first time they fell since comScore started making estimates in 2001.
Still some experts found encouraging signs that double-digit sales declines in November in categories like home furnishings, jewelry and luxury goods started to stabilize in December by not plummeting quite as deeply.
"We expected a very difficult season and it was, and Florida and California ended up the toughest places in the nation to operate," said Steve Knopik, chief executive officer of Beall's Inc., a Bradenton chain of 600 mid-priced department and outlet stores that cut capital spending and reduced its inventory for the rest of the winter.
The deep discounts that began well before the official start of the holiday season spurred a number of merchants to cut their earnings outlooks on Thursday, fueling more concerns about the health of the industry.
Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc., Gap Inc., Abercrombie & Fitch Co. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted a gain smaller than what Wall Street expected and cut its fourth-quarter earnings outlook.
"This suggests that the lower income group is feeling the pinch more than we thought and this is clearly reflected in the lower-than-expected numbers at Wal-Mart," said Ken Perkins, president of research company RetailMetrics LLC. "I think it says the economy is in more dire straits than we thought."
Wal-Mart, blaming the weak economy and severe winter conditions, said that same-store sales, or sales at stores opened at least a year, rose 1.2 percent. Excluding the impact of declining gasoline prices at the pump, the gain was 1.7 percent. Analysts surveyed by Thomson Reuters had expected a 2.8 percent increase, excluding fuel.
"The current economy remains challenging for all businesses, and retailers have already seen customers pull back on discretionary spending," Wal-Mart's Chief Financial Officer Tom Schoewe said in a statement. "Consumers are very focused on value and necessities."
Wal-Mart noted that health and wellness items were the categories that primarily fueled sales. Electronics sales were solid, while the apparel and jewelry business was weak.
Meanwhile, Costco Wholesale Corp. reported a 4 percent decline in same-store sales, but excluding the impact of lower gas prices and currency fluctuations, it actually posted a 4 percent gain. Lower gas prices are good for consumers, but reduce the sales volume for retailers like Costco.
Among department stores, Sears Holdings said its December same-store sales dropped 7.3 percent, weighed down by a 12.8 percent drop at domestic Sears stores. The company, whose brands include Kenmore and Craftsman, said Kmart same-store sales fell 1.1 percent.
Macy's Inc. reported that same-store sales fell 4 percent in December, less than the 5.3 percent decline that analysts had expected. For the combined November-December period, same-store sales were down 7.5 percent. But the department store chain cut its fourth-quarter and full-year earnings outlook due to heavy markdowns and announced plans to close 11 underperforming stores. The chain operates more than 840 Macy's stores.
Luxury retailer Saks Inc., which operates Saks Fifth Avenue, fared far worse, as affluent shoppers were spooked by the financial meltdown that resulted in massive layoffs on Wall Street and shrinking investment portfolios. Same-store sales dropped 19.8 percent for the month, worse than the 10 percent drop that Wall Street expected.
It wasn't all blamed on the recession. Weather played a role too with most of the country swept up in the coldest December in eight years and the stormiest in 12. In Florida, a balmy December insured that prices on the mounds of sweaters and outerwear had to be slashed even deeper to sell.
"Cold weather helps people feel like it's Christmas, but not when it limits travel this much," said Terry Bernhardt, chief operating officer of Planalytics, a Wayne Pa., business weather intelligence service used by many chains to shift goods where they will sell. "Weather was a hindrance to retailers this season except those selling portable heaters, snow blowers and lip care products. Bad weather was the reason why online retail traffic was up sharply a couple times."
Information from the Associated Press was used in this report. Mark Albright can be reached at firstname.lastname@example.org or (727) 893-8252.