Dismal December sales add to retailer woes

But luxury stores fared far worse as affluent shoppers sharply cut back on buying Gucci handbags and other status goods, spooked by the financial meltdown that led to massive layoffs on Wall Street and shrinking investment portfolios. Saks Inc. posted a 19.8 percent drop for the month, worse than the 10 percent decline Wall Street expected. Neiman Marcus Group Inc. suffered a 27.5 percent decline in same-store sales.

Gap Inc. suffered a 14 percent drop in same-store sales, worse than the 9.3 percent decline that analysts had expected. It also cut its earnings outlook.

"Customers waited until late in the month to shop and we faced a highly competitive promotional environment," said Gap's Chief Financial Officer Sabrina Simmons.

Teen apparel retailers also suffered through a miserable holiday season. Wet Seal Inc. reported a 12.5 percent decline, larger than the 11.9 percent analysts expected, as its Arden B chain dragged down results. Abercrombie & Fitch Co. reported a 24 percent drop, in line with the 23.5 percent drop analysts had forecast.

Kitchen gadget chain Williams-Sonoma Inc., which didn't break out December figures, said its same-store sales dropped more than 24 percent for the eight-week period ended Dec. 28 and warned its fourth-quarter profit will likely come in at the low end of expectations.

Video game retailer GameStop Corp. bucked the trend, turning in a same-store sales increase of 10.2 percent in the nine weeks between Nov. 2 and Jan. 3.

Three of the top five best-selling games were from Activision Blizzard Inc.: "Call of Duty: World at War," "Guitar Hero World Tour" and "World of Warcraft: Wrath of the Lich King." Microsoft Corp.'s alien shooter "Gears of War 2" and Nintendo's "Wii Fit" were also among the top sellers.

Hardware sales were led by Nintendo's Wii and Microsoft's Xbox 360.

More on retail sales  |  economy

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