Retailers see sales drop in dreary November

NEW YORK - Retailers who suffered through a miserable November — despite a surge in sales the day after Thanksgiving — are worried that the usual lull between the holiday weekend and the final days before Christmas could be dangerously quiet this year.

With financially squeezed shoppers holding out for even better deals or are simply already done, retailers who are already offering deep discounts will likely be forced to be even more aggressive as they lurch through a season looking to be the weakest in at least 30 years.

Worries about the holiday season increased Thursday after many retailers — with Wal-Mart the notable exception — reported November sales so dismal it was the industry’s worst month since at least 1969. The malaise cut across all sectors as shoppers worried about layoffs and shrinking retirement funds and focused on necessities.

“It’s an awful beginning to the holiday season,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. “This is going to be a difficult holiday season for most retailers. There are going to be more bankruptcies.”

He predicted that the retrenchment in spending will linger for at least another six months.

Based on conversations with stores, this week’s sales have been slower than expected, said Janet Hoffman, managing partner of the North American retail practice of Accenture.

Karen MacDonald, a spokeswoman at mall operator Taubman Centers Inc., said that stores are being more aggressive with discounting for this coming weekend compared with a year ago.

In recent years, shoppers have been increasingly delaying their holiday shopping to the final days before Christmas for better bargains, but analysts say they believe this year people just can’t afford to spend more.

C. Britt Beemer, chairman of America’s Research Group, notes a higher percentage of shoppers he’s surveyed had completed their holiday buying on Friday compared with a year ago.

“If retailers are not super aggressive with discounts, stores will be retail museums,” said Beemer, who expects the lull will be more pronounced this year.

Worries about the economy have helped Wal-Mart, which reported a 3.4 percent gain in same-store sales, surpassing the 2.1 percent increase that analysts surveyed by Thomson Reuters expected.

Wal-Mart added that business is starting to benefit from falling gas prices, noting that shopping trips increased and “customers had more discretionary income to spend.” It expects same-store sales growth for December to be at the high end of its range of 1 to 3 percent.

However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected 5 percent drop in same-store sales.

Target Corp., which has been stumbling as its merchandise focuses more on nonessentials like trendy clothes, reported a 10.4 percent drop.

And most mall-based chains and department stores fared even worse, with Abercrombie & Fitch Co., Nordstrom Inc., and Kohl’s Corp. reporting percentage declines exceeding 15 percent.

Same-store sales are sales at stores open at least a year and are considered a key indicator of a retailer’s health.

According to the Goldman Sachs-International Council of Shopping Centers index, same-store sales dropped 2.7 percent for November, making it the worst month since at least 1969 when the index began. November’s results were even more miserable than the 1 percent drop that Niemira anticipated.

Excluding Wal-Mart, the index declined 7.7 percent, indicating a widening gap between the world’s largest retailer and the rest of the merchants.