Transcripts

Retailers' Say The Holidays Didn't Deliver

SUSIE GHARIB: Meanwhile, there are other concerns about the outlook for the U.S. economy today after the nation's retailers reported dismal holiday sales. December chain store sales were the weakest in years, sparking profit warnings. As Suzanne Pratt reports, experts say the disappointing holiday performance is making analysts more pessimistic about consumer spending in 2008.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: For many of the nation's retailers, from Macy's to Limited Brands, the holiday season was worse than expected. According to Thomson Financial, which tracks results at 43 retail chains, December sales rose only half a percentage point, well below estimates. In the same period of '06, sales jumped 3.3 percent. Some stores blamed an early Thanksgiving, which meant the post- holiday shopping week came in November rather than December. Still, it was clear consumers held back mostly because of higher energy costs and the housing slump. Wachovia Securities analyst John Morris expects those headwinds to curtail discretionary spending this year as well.

JOHN MORRIS, SPECIALTY RETAIL ANALYST, WACHOVIA SECURITIES: The question really is how long will this go on? And we think it's going to a very grinding, tough year that we're likely to continue to see the consumer against the ropes probably a little bit longer than investors realize.

PRATT: Wal-Mart was the one bright spot in the December results, reporting better-than-expected sales. Citigroup analyst Deborah Weinswig, whose firm does investment banking and other business with Wal-Mart, predicts the low-price giant will continue to do well this year, no matter what happens with the economy.

DEBORAH WEINSWIG, RETAIL ANALYST, CITI: Wal-Mart is one of our top picks. We think that in this type of environment, with this type of macro backdrop, this is really where Wal-Mart shines.

PRATT: And Weinswig says almost all retailers are likely to feel the continued effects of a major non-macroeconomic factor.

WEINSWIG: You also don't have any great fashion trends. You know, the most exciting thing I've heard is yellow accessories, so yellow pumps, yellow handbags, yellow necklaces.

PRATT: December's disappointing sales also led several retailers to cut profit forecasts for the current quarter. Most stores will report those quarterly earnings next month. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.