If the Grinch stole Christmas, consumers drove the getaway car.
Confirming dire predictions, retailers across the nation reported yesterday their worst December sales gains in at least a decade, battered by reluctant shoppers, a glutted market and bad weather to boot.
"Consumers are just watching their pocketbooks and, unless there's value, they're not buying," said Mark A. Millman, president of Millman Search Group Inc., a leading retail consulting firm in Lutherville. "We're not in a recession, but people are uncomfortable about their jobs, the economy, the state of the government shutdown. There's a lot of concern out there. Their first reaction is not to spend money unless necessary. I don't see any let-up."
Deep discounts didn't lure shoppers to stores. But by slashing prices, national retailers ate into their profits during the holiday season -- a time when most merchants generate 30 percent to 50 percent of their annual sales. The fallout prompted many retailers to caution Wall Street that their fourth-quarter earnings would be lackluster.
Analysts warned of even worse to come -- a rash of bankruptcies and layoffs in the U.S. retail sector, which employs an estimated 20 million people, about 13 percent of the work force. Already, some analysts are having flashbacks to the 1990-91 recession.
"It's almost a siege mentality that's hitting the Christmas season, and it began really after Labor Day," said Otto Grote, a retail analyst with Derby Securities in New York. "Across the board, what I'm seeing is that financial analysts are carrying estimates that reflect growth rates still in the 20 percent range this year, and yet most of the stocks are selling at one-half of these growth rates. You don't see that very often. It means probably that financial analysts are too optimistic about 1996."
After the results released yesterday, those forecasts may change. Salomon Brothers Inc. said its monthly retail sales index rose 1.8 percent, the smallest gain for December in the 10-year history of the index.
December sales in stores open at least a year -- also called same-store sales -- rose 1.7 percent, the smallest increase for that month in 10 years, according to the Bloomberg Same-Store Sales index and Stone & McCarthy Research Associates.
