A story that ran Friday in

The Financial Times

, the British newspaper, titled "Christmas cheer for US stores" seemed to ignore the nose-dive retailers took on Wall Street the day before.

As reports of a lukewarm Christmas season continued to sour investors, retailers lost 0.85 to finish at 109.11 on Thursday, according to the WWD Index, compiled by

Women's Wear Daily

, an industry trade magazine. Department stores were one of the hardest hit groups, off 2.62 to close at 148.07.

The Financial Times report, written by Richard Tomkins, pointed to same store sales increases at

J.C. Penney Company

(JCP:NYSE) and

Dayton Hudson

(DH:NYSE), two major department store retailers, as indicators that "the Christmas holiday season just ended could turn out to have been noticeably better than last year's disappointing season."

Even a lump of coal would have been better than last year.

But the real problem is that Tomkins ignored key news from J.C. Penney and Dayton Hudson, which was plastered over the wire services and news channels yesterday. If Tomkins were based in London it might be fair to say the news got lost in a burst of static over the Atlantic. But since he reports from New York City, even a peak at

CNBC

would have illuminated the following:

While Penney's same stores sales rose 6.2%, the company said in a press release that gross margins were below plan and would result in fourth quarter EPS between $1.15 and $1.25, compared to last year's EPS of $1.31 for the quarter. Analysts had been expecting an increase over last year.

Similarly Dayton Hudson's 4.2% same store sales rise masked trouble at its name sake department store chain, where sales were below plan, according to a press release.

Despite Tomkins' rosy interpretation, the mood for retailers on Wall Street in the New Year has been far from cheery. It's more accurately summed by a headline in

The Wall Street Journal's

"Heard on The Street" column, which also ran on Friday: "Deep Gloom Descends on Retailers."

By Suzanne Kapner