Retailers Set Sale For a Post-Christmas Clean-up

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Post-Christmas, a mixed retail bag

When the going gets tough, Americans, apparently, shop fast, late — and cheap.

Mammoth discounter Wal-Mart looks to be the big winner so far in a dismal Christmas season for retailers, happily reporting Wednesday that its holiday sales for the period between Thanksgiving and Christmas Eve came in above company expectations of a 4-6 percent year-over-year increase. Rival Kmart, meanwhile, said its sales from Nov. 22 to Dec. 23 came in at the low end of expectations, but picked up considerably in the last few shopping days before Christmas, with winter apparel — thanks to some cold days — finally getting off the ground. And the ultimate in lazy-man's shopping destinations — the Internet — looks to be having a better season than the mall, as Yahoo announced that Thanksgiving-to-Christmas online sales through its portal were up 86 percent from last year.

But if U.S. consumers, cowed by hundreds of thousands of corporate layoff announcements, the still-shrinking economy and the aftershocks of Sept. 11, looked to convenience and price to meet their pared-down holiday shopping lists, that left a lot of retailers out in the cold. And even the last-minute push — chain store sales surged 2.9 percent for the week ended Dec. 22, reversing the 0.5 percent decline recorded the previous week, according to the Bank of Tokyo Mitsubishi and UBS Warburg's weekly report — wasn't nearly enough to turn retailers' seasonal fortunes around.

Overall, retail sales fell 4.5 percent for the month through Dec. 22 compared with the comparable period in November, Instinet Research's Redbook report said Wednesday. And Instinet had a glummer view of the past week, pegging the week's sales at a 0.6 percent drop (still an improvement from the 1.1 percent decline of the previous week).

All of which means if consumers have fallen in love with bargain-hunting, waiting longer to shop and shopping at cheaper stores, the post-Christmas sales season is going to be a shoppers' paradise for anyone with a few bucks left over. Many big chains kicked things off immediately with early openings and big specials Dec. 26, and Sears in particular was offering special promotions with discounts as deep as 85 percent, as well as zero-percent financing on some appliances.

Thus do supply and demand meet again, with the skittish consumer setting some very tough terms. The post-Christmas period has always been rife with discounts, as retailers look to unload the last of their leftover winter inventory on shoppers returning unwearable sweaters for store credit. This year the price cuts will go all the way to the bone and beyond, and there are hopes that the bargains (getting plenty of free publicity from economics writers) will draw enough mall traffic to get the job done.

It's going to hurt — the Christmas season normally accounts for half of some retailer's annual profits, and boosting sales by cutting prices may be good economics, but it can be murder on the bottom line. But it beats getting stuck with a warehouse full of winter coats in March.