- The Washington Times - Friday, January 10, 2003

Retailers reported disappointing December sales despite an all-out effort to get consumers to open their wallets during the holiday season.

Lack of hot-selling items, the uncertain economy and the threat of war left consumers wary of spending this season despite heavy discounts and promotions.

"I think, in the near term, there will be a continuation of a struggle in the retail industry," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd.

U.S. retailers' sales at stores open at least a year same-store sales, considered retailers' best performance indicator rose 1 percent in December from a year earlier, according to Bank of Tokyo-Mitsubishi, which tracks more than 80 U.S. merchants. The average November-December increase was 0.5 percent, Mr. Niemira said.

The National Retail Federation estimated holiday sales would reach $209 billion a 4 percent gain over last year. The official figures from the Department of Commerce are scheduled to be released next week.

December same-store sales at Wal-Mart Stores Inc. and Target Corp. usually two strong contenders during the holidays were below expectations, reporting a 2.3 percent increase and a 0.3 percent decline, respectively. Kohl's reported a 3.3 percent jump in same-store sales.

Despite the lackluster season, Wal-Mart and Target are optimistic for coming months. Wal-Mart expects same-store sales to increase this month by as much as 4 percent and Target expects an increase of as much as 3 percent.

Some mall-based apparel chains such as AnnTaylor and Talbots had a particularly difficult season, while trendy, teen-targeted chains fared much better.

Same-store sales at Hot Topic were up 10.6 percent, while Pacific Sunwear of California's rose 16.1 percent.

Both Gap Inc. and J.C. Penney ended the year on a high note. Gap Inc., which has been struggling for years, seems to be rebounding. Same-store sales rose 5 percent in December. J.C. Penney reported a 4.7 percent increase.

Other department store chains were not so lucky. Federated Department Stores, which owns Macy's and Bloomingdale's, had a 2.6 percent drop in same-store sales, while May Department Stores Co., which owns Lord & Taylor, had a 4.7 percent decline. Sears, Roebuck and Co. reported a 4.6 percent drop last month.

Some analysts say the shorter-than-usual shopping season may have had little effect on overall sales. Historically, consumers tend to wait until the final weeks and days before Christmas to do their shopping, and this year was no different.

More than half of holiday shoppers completed their shopping the last week before Christmas and more than one-fifth finished Christmas Eve, according to a survey by the International Mass Retail Association.

The problem may have been that retailers kept inventories low during the holidays, fearing inability to sell much merchandise with consumers concerned about the sluggish economy. So there wasn't much selection when shoppers hit the stores later in the season, analysts say.

Gift cards, which were big sellers this year, don't automatically translate into sales for the retailers. Purchased gift cards are considered a liability, not a sale, until redeemed, say retail officials. Consumers may not redeem gift cards until later in the new year or not at all.

Online shopping, however, had some brighter news. Initial reports of online holiday retail sales, from Nov. 1 to Dec. 31, are exceeding original forecasts of $13.1 billion, according to Jupiter Research, an online research firm. That would represent growth of over 17 percent from a year earlier. Jupiter expects to release official holiday sales figures in March.

This story is based in part on wire-service reports.

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