Transcripts

Post Xmas Sales Don't Deliver

SUZANNE PRATT: On this day after Christmas, retailers pulled out all the stops, offering deep discounts to clear out holiday merchandise. Historically, the week between Christmas and New Year's accounts for about 15 percent of holiday sales. But this year, desperate retailers are doing all they can to ring up extra sales and save the season. And as Erika Miller reports, the bleak sales environment does not bode well for 2009.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you thought the discounts were deep before Christmas, you may be shocked by the markdowns now. Kmart, for example, is offering 50 to 70 percent off many items. Store manager Charlie Moore says that's what it takes to get shoppers to open their wallets.

CHARLIE MOORE, STORE MANAGER, KMART: Post Christmas, we've seen a lot of people look at electronics, people bringing in gift cards looking for video games, looking for some toys that are left, things maybe they missed prior to Christmas.

MILLER: Other chains like rival JC Penney, opened at 5:30 a.m. offering door buster specials and wake-up calls. Despite these efforts, retail analyst Joseph Feldman warns many stores will have trouble moving merchandise.

JOSEPH FELDMAN, RETAIL ANALYST, TELSEY ADVISORY GROUP: The retailers need to clear inventory. They need to get ready for the spring goods that are going to come in. And what's concerning here is gift cards sales were a little weaker, so you may see less redemptions in January and February, making it more difficult to clear that inventory.

MILLER: 2008 is shaping up to be the worst holiday season in decades due to the weak economy and stormy weather. According to preliminary data from Mastercard's spending pulse, retail sales fell between 5.5 and 8 percent for the holiday season. A better indicator will come January 8, when major chains report same store sales results. Amazon.com was one of the few companies reporting good news today. The online retailer said sales this holiday season were its best ever, although it did not provide additional details. Analysts are quick to point out that strong sales don't always translate into strong profits -- especially if margins are razor thin. This year, Circuit City, Steve & Barry's and a slew of other retail chains filed for bankruptcy protection. Analysts see more store closings ahead.

FELDMAN: We are expecting more after the holiday season, once the retailers kind of come out of this and see where their books are and what the liquidity situation is. We don't expect it to be very good and we expect to see some additional bankruptcy filings.

MILLER: Weak holiday sales don't just hurt the nation's merchants. Consumer spending drives two thirds of economic growth. So economists warn trouble in the sector will likely lead to cutbacks at other businesses early next year. Erika Miller, NIGHTLY BUSINESS REPORT, New York.