Last-Minute Shoppers Unlikely to Save Retailers

Updated from 7:07 a.m. EST

Sales are up this year, but retailers still might not have a happy holiday season.

With just three days before Christmas, time is running out for retailers such as Target (TGT Quote), Wal-Mart (WMT Quote) and Best Buy (BBY Quote) to make up for slower-than-expected December sales. With myriad factors weighing on retailers, some analysts doubt even the expected final shopping spree before Christmas will salvage the month.

"It's not going to happen," warned Richard Hastings, chief economist and retail analyst at credit firm Bernard Sands. "I don't expect to see any positive reversal to the weak holiday selling season."

Retail sales this holiday season are being hit by a number of factors. While improving, the jobs picture is still poor, particularly for lower-income workers. Severe weather on the East Coast depressed sales in that region earlier this month. Meanwhile, consumers are shifting increasing amounts of their spending away from December to January, particularly as gift cards have become more popular.

"There's no question that the holiday sales season has been disappointing for many retailers," said Kurt Barnard, president of consulting company Retail Forecasting.

The bad news for investors is that after a booming third quarter, holiday expectations may have gotten ahead of reality. Many retail stocks have posted heady gains this year, leaving them vulnerable as the holiday season didn't live up to overly optimistic expectations.

After hitting a 52-week high of 384.28 on Nov. 28, the S&P Retail Index stumbled nearly 8% in 12 subsequent trading days. Individual names such as Circuit City (CC Quote) suffered greater declines.

Still, the Retail Index remains up nearly 40% year to date, while Best Buy's shares are up 119.1% and Target's are up 27.7%. Shares of apparel chain Pacific Sunwear (PSUN Quote) have jumped 76.5% this year.

Those and other names in the sector could be at risk if sales -- or earnings -- come in below expectations.