US Retail Stocks Fall on Holiday Shopping Worries

Key retail stocks fell Monday as investors feared that deep discounts offered by stores during the year's first holiday shopping weekend could sap profits and would not save a bleak season.

Department store operators were badly hurt, with shares of Macy's down 8 percent, Saks Inc down 5 percent and JC Penney down 3.5 percent.

Apparel chains also suffered, with Abercrombie & Fitch down 6.5 percent, Aeropostale down 5.6 percent, and Urban Outfitters   down 4.9 percent.

Best Buy was down 4.4 percent despite signs that shoppers bought electronics goods over the weekend. Even shares of discounters Wal-Mart Stores, Big Lots and Target were down, though analysts have said they may come out ahead this season as cash-strapped consumers look for bargains.

The Standard & Poor's Retail Index fell 3.4 percent.

Early results from the Black Friday weekend that kicks off U.S. holiday shopping showed that sales grew both in stores and online, fueled by repeat trips, heavier online sales and deep discounts from retailers across the price spectrum.

According to the National Retail Federation (NRF), shoppers spent an average of 7.2 percent more per person to nearly $373 during the four-day holiday weekend from Thanksgiving on Thursday through Sunday. Total spending was $41 billion.

More than 172 million shoppers visited stores and websites during that time, up from 147 million a year ago, the NRF said.

Excluding repeat visits, the number of people who shopped over the weekend rose to 110 million from 99.5 million.

But the NRF kept its overall holiday season forecast for 2.2 percent growth unchanged, signaling that a sharp drop-off in sales is expected for the coming weeks.

That would represent the slowest growth in six years, as measured by NRF.

"We thought mall traffic was good but lines were not as impressive as shoppers cherry-picked the best deals," said UBS analyst Roxanne Meyer. "We thought promotions would have been steeper, given retailers' inventory issues. The new reality is that 25 to 30 percent off is not going to cut it."

(Watch the accompanying video to see how retailers are shaping up on the back of Black Friday.)

"Despite initial reports of sales gains this weekend, we believe the challenge for retailers will be to keep, or in some cases increase, momentum, in order to clear seasonal inventory despite five fewer shopping days and a later Hanukkah," Meyer added.

Black Friday, the day after Thanksgiving, is the traditional start of the holiday shopping season and once marked the day retailers would turn a profit—or get into the black—for the year. A calendar shift this year resulted in a shorter period between Thanksgiving and Christmas.

Shares of Wal-Mart fell 3 percent to $54.10 on the New York Stock Exchange while Big Lots fell 6 percent to $16.44 and Target fell 4 percent to $32.40.

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