Sector Snap: Department stores slide

Citi analyst Deborah L. Weinswig said in a note to investors that although retailer offered aggressive promotions to get shoppers in the stores, consumers didn't stay for long with traffic trailing by the end of the weekend.

Black Friday, the day after Thanksgiving, got its name because the traditional flood of shoppers marked the first day stores broke into profitability for the full year.

Weinswig said shoppers arrived at stores early on Black Friday to take advantage of morning promotions, but "consumers were very deliberate with their spending this year and focused on finding the items on their shortened lists."

She said most department store retailers had heavy inventories heading into Black Friday due to slow sales that have plagued the stores since September. She said since most retailers likely did not make it through as much inventory as they had planned, many may have to offer more promotions through the holiday season--a move that could affect profits.

With consumers still stressed about the strength of the economy, most analysts aren't expecting a strong shopping season.

Roth Capital Partners analyst Elizabeth Pierce said in an analyst note that although sales may have jumped slightly over the Thanksgiving holiday weekend, "our outlook remains bleak for the season as we believe sales over the holiday weekend were event/promotional driven and the result of some pent-up demand rather than driven by the carefree spending that has characterized holiday sales in seasons past."

Investors responded to the grim predictions by sending stocks tumbling in the overall market. Shares of department stores chains also fell, some sharply.

Shares of Macy's Inc. fell 87 cents, or 12 percent, to $6.55 in morning trading while shares of J.C. Penney Co. Inc. dropped $1.70, or 9.1 percent, to $17.29.

Dillard's Inc. shares plummeted 58 cents, or 16 percent, to $3.08 and shares of Nordstrom Inc. fell 69 cents, or 6.1 percent, to $10.68. Shares of Saks Inc. slipped 55 cents, or 13 percent, to $3.76.