Many top U.S. retailers missed Wall Street's expectations for December sales, hurt by a post-Christmas blizzard on the East Coast and shoppers returning to their cautious ways after flocking to stores after Thanksgiving.
Retailers ranging from department store operator Macy's Inc and discounter Target Corp to teen clothing store American Eagle Outfitters were among those whose results fell far short of forecasts.
The turbulence is here to stay, said David Bassuk, a managing director at consulting firm AlixPartners. The consumer is still very sensitive to even slight fluctuations in prices -- the consumer is still looking for deals.
Now that Christmas is over, consumers, whose spending accounts for about 70 percent of the U.S. economy, are putting their wallets away.
I want money in my bank account and my 401k back to where it used to be, said Patricia Welcoy, a legal assistant shopping on Wednesday in Manhattan and toting a T.J. Maxx bag.
But some retailers blamed the weather for sales missing expectations that were ratcheted up after shoppers hit stores at the start of the holiday shopping season.
We did a lot better before the snow hit, no question about it, Macy's Chief Executive Terry Lundgren told cable channel CNBC.
British retailers also said snow hurt Christmas sales.
Unemployment is still hovering just below 10 percent, and efforts by Americans to pay down high household debt loads are limiting their ability to shop as often as they once did.
New U.S. claims for unemployment benefits rose more than expected last week, although a decline in the four-week average to a more than two-year low indicated some improvement in the labor market.
Analysts were expecting an average rise of 3.4 percent in December sales at stores open at least a year for the 28 major retailers tracked by Thomson Reuters.
Macy's same-store sales rose 3.9 percent, below estimates of 4.5 percent, but the company did not raise its profit forecast. That disappointed Wall Street, and Macy's shares fell 3.1 percent before markets opened.
Shares of other retailers that fell short also took a hit. Clothing store chain Gap Inc was down 6.7 percent after it reported an unexpected same-store sales drop. Target's shares were down 5.0 percent.
Wholesale club operator Costco Wholesale Corp's U.S. same-store sales rose 4 percent, below expectations. Wet Seal posted an unexpected drop, and American Eagle Outfitters reported an 11 percent decline and lowered its profit forecast, as teen chains had cut prices aggressively to win shoppers away from rivals.
The Standard & Poor's Retail Index gained 23.4 percent in 2010, but has not budged much since early December on worries that consumer spending growth will slow. Analysts had said only higher profit forecasts on Thursday would push retailers' stocks higher.
The holiday season was humming along until a massive East Coast snowstorm disrupted shopping the week after Christmas, which accounts for 15 percent of seasonal sales.
Research firm ShopperTrak said on Wednesday that retailers did not make up all of the $1 billion in retail sales it said shoppers put off because of the storm.
BJ's Wholesale Club Inc said the snowstorm had hurt December sales, which ended up below forecasts.
Victoria's Secret parent Limited Brands Inc was one of a few retailers to beat expectations.
Hot Topic's same-store sales fell again, down 1.7 percent, but still exceeded expectations.
Wall Street's forecast of higher retail sales was consistent with a jump in auto sales for December.
(Reporting by Phil Wahba; additional reporting by Dhanya Skariachan in New York, and NR Sethuraman in Bangalore)