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The holiday season isn't turning out to be so merry for the nation's chain stores. Shares of retailers slipped on Monday even as the broader indices were slightly higher.


Dow Jones Industrial Average

gained 19 points, or almost 0.2%, to 10,669.21 as


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2.5% gain helped make up for


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losing another 5.7%. The

S&P 500

was virtually unchanged at 1194.66 and the

Nasdaq Composite

slipped 0.3% to 2127.85.

Shares of retailers lagged the overall market as they have so far this month. The Morgan Stanley Retail Index, which includes shares of 38 companies, was down 0.7% for the day, as

Ann Taylor

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lost 3% and



dropped 2%. For the month, the index is up just 0.3% while the S&P 500 has gained almost 2%. That's a reversal from October and November when the retailers index outperformed, gaining 10% compared to the S&P's 5% rise.

After a slow post-Thanksgiving kickoff to the busiest shopping season of the year, the numbers coming in on the mid-December period aren't getting any better. Consumers aren't upping holiday budgets like they did last year, as gas and home heating oil prices have risen, no new tax refund checks were forthcoming this year and income growth has barely kept pace with inflation.

Retail sales over the last weekend before Christmas dropped 3.3% from the same period last year, according to data compiled by ShopperTrak. For all of last week, sales fell almost 6%, the research firm said. Wall Street analysts who put on their gumshoes and stalked local malls to count empty parking spaces also reported declines.

Analysts for Prudential Equity Group trekked around Northern California and reported 5% fewer customers on line, 2% fewer bags carried and 6% lower customer traffic than last year. And over the weekend,


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reaffirmed its forecast for a sales increase of just 1% top 3%. Its shares were up 0.4% on Monday.

If there were any bright spots, they were on the Internet. Online market trackers at comScore said holiday sales through Dec. 12 were up 23% from 2003 to $11.1 billion. Looking at online "foot traffic," measured by the number of visitors to retailers' Web sites, comScore said,

Best Buy

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saw the biggest increases. Shares of Best Buy rose 0.5% and Overstock rose 0.9%. Blockbuster is a tiny piece of


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, whose shares rose 0.7%.

And in more good news for

Apple Computer

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, as if Steve Jobs needed any more now that he has permission to tear down an ugly mansion on a choice piece of Woodside, Calif., property he owns, comScore said the iPod was the most popular product searched for on the Web last week.


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( EK) Easyshare and Sony's Playstation 2 rounded out the top five search terms. Apple lost 3.5%, Sony's ADR rose 0.5%, Canon's ADR gained 0.3% and Kodak added 0.6%.

Industry experts had a couple of excuses on hand to explain the sagging sales figures. Michael Niemira, chief economist for the International Council of Shopping Centers, blamed lazy, late-shopping consumers. "While there is some concern regarding the continued retail sluggishness this season, consumers have an additional two days this year to finish their holiday shopping, which may boost this season's final retail performance," he said.

He also trotted out the gift-card defense. There is some merit to the notion, put forth in previous years as well, that spending during the pre-Christmas season is being artificially depressed by gift-card purchases. Under that theory, put forth by numerous analysts to explain 2004's lackluster results, November and December sales are actually higher than they appear because gift cards have been purchased but won't be redeemed typically until January. And stores don't book the cards as sales until they are redeemed.

In a survey conducted for the National Retail Federation in early November, consumers said they planned to spend almost 12% of their holiday gift budget, or about $80 on average, on gift cards. About 74% of consumers planned to buy gift cards, up from 70% last year, with a total value of $17.3 billion. Gift cards accounted for about 8% of holiday sales last year, according to the trade group.

In macroeconomic data, census figures on total retail sales contain a lot of things that likely wouldn't be bought with gift cards, like cars and cans of paint, for example. But the bureau does have a sub-category known as GAFO, for general merchandise, apparel, furniture and other goods, that looks more appropriate. Sales of GAFO items totaled $961 billion in 2003, or a little over one-quarter of all retail sales.

Comparing total GAFO sales for January to the prior November and December shows an increasing shift into the later period over the past three holiday shopping periods. In 2001, the $61.7 billion of GAFO merchandise purchased in January represented about 52.8% of November and December sales from 2000. In January 2002, the percentage rose to 53.2%, in 2003 to 54.5% and 2004 to 56%. And the shift wasn't related to slowing November-December GAFO sales, which gained almost 5% in 2003, 1% in 2002 and 4% in 2001.

Still, the shift represents less than 2 percentage points a year, or only about $4 billion. That's a drop in the bucket to the more than $3 trillion of total retail sales a year. And it's unlikely to be enough to save this year's season.

Richard Hastings, retail analyst at Bernard Sands LLC, explains that consumers have been buying a lot of big ticket items all year, especially big-screen TVs and autos, leaving less spending capacity for year-end.

Still, he thinks with gift cards and sales online and at private boutiques that aren't captured by recent surveys, the holidays will turn out "moderately jolly after all" for the economy.

In keeping with TSC's editorial policy, Pressman doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send

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