Rough December for retailers

Chain store sales for December 2008 fell by 1.7 percent on a year-over-year same-store basis, according to the International Council of Shopping Centers (ICSC). November-December holiday sales fell 2.2 percent compared to the 2007 season.

The negative comps reflect the worst December retail season in decades.

"This was an extraordinarily difficult holiday season," said Michael P. Niemira, ICSC chief economist and director of research. "Retailers were forced to slash prices to entice consumers to spend," he said. "But even that strategy was not enough as the elevated worry about job insecurity and increased job layoff announcements continued to restrain consumers’ willingness and ability to spend," Niemira added.

Wal-Mart U.S. posted a 1.7 percent comp-store sales gain in December, while rival Target declined 4.1 percent. Even Wal-Mart's gain was lower than Wall Street expectations.

December same-store sales at Sears stores in the United States dropped 12.8 percent as most of its hardline categories suffered, according to the company.

Still, the overall industry did better in December than in November, when the same-store sales at U.S. chain stores were measured as a 2.7 percent decline.

"It's encouraging that most retailers saw some improvement in their numbers compared with November," said Frank Badillo, senior economist at TNS Retail Forward.

"In the case of Wal-Mart and others, the new weakness largely reflected the impact of weather, lower gasoline prices and even exchange rate effects.  These results provide signs that retail weakness may be bottoming out."