Retailers Finding No Joy in the Holidays

Updated from 5:14 p.m. EST

With Christmas just two days away, retailers shouldn't expect a holiday surprise to uplift a disappointing holiday season.

Despite a flurry of holiday sales over the weekend, ShopperTrak RCT said December retail sales are down more than 5.5% from last year. Meanwhile, retail giants Wal-Mart WMT, Target TGT and Federated Department Stores FD reported below or at the bottom range of their plans, casting doubt on the fortunes of the rest of the retail sector.

"If Wal-Mart's saying they are having sales below plan, that's a bad sign," said Jay McIntosh, a retail analyst for Ernst & Young. The retailing giant said Monday that two of its divisions are performing below guidance.

Until recently, the poor holiday sales figures were not terribly disconcerting because they were within companies' projections, analysts say. But with sales falling below those projections, companies' earnings could take a hit.

"Retailers figure on a certain kind of performance. When sales fall below that, you see some material impact," said Michael Niemira, president of Bank of Tokyo-Mitsubishi and lead consultant on ShopperTrak's retail report.

The holidays have not been a happy time so far. Last month, many retailers, including Target TGT and Sears S, reported same-store sales declines. Others, including Wal-Mart, reported that same-store sales came in toward the bottom of expectations. (Same-store sales compare results from outlets open more than one year.)

Wal-Mart's not the only one feeling the holiday pinch. Target's same-store sales for both last week and the first three weeks of December have come in "well below plan," the company said on Monday. Target had expected its comparable-store sales to grow 3% to 5%.

Federated's results echoed Target's. The company's same-store sales for November and December are coming in below its estimated range of flat to down 2.5%, the company said Monday. Wal-Mart closed trading Monday down $1.20, or 2.4%, to $49.59. Target closed down $1.35, or 4.5%, to $28.54 and Federated finished trading off 15 cents, or 1.5%, to $9.63.

"Sales did not strengthen as much as anticipated in the third week of December," Federated said in a statement. "Given the anticipated volume of the next few days before Christmas as well as the week after Christmas, it is difficult to forecast."

Spending did pick up last week and over the weekend, according to ShopperTrak. Sales at general merchandise, apparel, furniture and specialty stores amounted to $144.6 billion in the week ended Saturday, up about 22% from the previous week, ShopperTrak said. But sales were down 5.8% compared with the same week last year.