Christmas sales in US disappoint

US shoppers have cut their spending

US retailers saw disappointing sales in December's key Christmas trading period and have lowered their earnings forecasts as consumers cut spending.

Discount giant Wal-Mart saw sales miss forecasts, rising 1.7% year-on-year against predictions of 2.8% growth.

The firm said it expected earnings per share for the fourth quarter to the end of January to miss earlier estimates.

Other retailers, including Gap and department store group Macy's, also warned of lower quarterly earnings.

'More challenging'

Wal-Mart is predicting earnings of 91-94 cents a share in the fourth quarter, instead of the $1.03-$1.07 that was previously forecast.

This environment dictated a very aggressive promotional stance, with a focus on cash flow and inventory levels Neal Goldberg, Zale chief executive

"Due to the difficult economy and severe winter weather in some regions, the holiday season was more challenging for retailers than expected," said Wal-Mart vice-chairman Eduardo Castro-Wright.

Limited Brands, which owns chains such as Victoria's Secret among others, saw December's sales drop 10% year-on-year - more than expected.

It is predicting that fourth-quarter earnings will be in the region of 55-70 cents per share, below analysts' expectations of 88 cents.

Meanwhile, Macy's said its same-store sales declined 4% in December, and said it was now cuttings its fourth-quarter profit forecast. The firm will also close 11 underperforming outlets.

'Difficult'

Jewellery retailer Zale saw sales decline 22% in December year-on-year, adding that the holiday period had been the "most difficult in memory".

"This environment dictated a very aggressive promotional stance, with a focus on cash flow and inventory levels," said Zale chief executive Neal Goldberg.

At clothing chain Gap, December same-store sales were down 14%, and the retailer also cut its profit forecast.

Many analysts believe conditions will remain tough for the months ahead, amid continued uncertainty over the economy.

Research group Retail Metrics now estimates that, on average, US retailers will report a 19.3% fall in profit for the last three months of 2008, widening to 27.5% if Wal-Mart is excluded.