Brookstone Warns

The retailer is the latest to suffer a slow holiday season
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Brookstone (BKST) said weak holiday sales would cause it to miss fourth-quarter targets.

The Merrimack, N.H., gadget retailer said sales in stores open at least a year were flat for the two months ended Jan. 1, with weakness concentrated in massage and audio products.

The shortfall came as retailers big and small struggled with a slow and price-conscious holiday season. Shares of Brookstone rival

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plunged last week after the San Francisco retailer warned of weak holiday sales. Giant

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recovered from a rare setback on Thanksgiving weekend to post a discount-fueled sales gain.

Brookstone said it expects the soft performance to hurt earnings for the fourth quarter ending this month. The company forecast fiscal 2005 earnings of around $1.05 a share, a dime short of the Wall Street analyst consensus estimate produced by Thomson First Call. The company said fourth-quarter numbers would be hurt by what it cryptically called "physical inventory results" as well.

"While many of our new product offerings performed well during this period, our overall same-store sales this holiday were below expectations," said CEO Michael Anthony. "It is also important to note that we maintained our product margins during this challenging holiday season."

In after-hours trading, Brookstone dropped 68 cents to $18.