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Retailers reported dismal sales figures for December on Thursday.
The data confirmed fears that the holiday season was the weakest in decades, and deep discounts spurred a number of merchants to cut their earnings outlooks Thursday, fueling more concerns about the health of the industry.
The Retail Trade
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Among the many retailers posting steep declines, the biggest surprise came from Wal-Mart [WMT
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], which posted a smaller sales gain than what Wall Street expected and cut its fourth-quarter earnings outlook.
"Wal-mart customers are being massacred by this economy!" exclaims Howard Davidowitz on the Fast Money Final Call . "Who's the customer with the adjustable rate mortgage? It's the Wal-Mart customer."
About 50% of Wal-Mart merchandise is discretionary. And Davidowitz doesn't think Wal-Mart shoppers will open their wallets for things ranging from TV's to T-shirts. "And that's why I like Dollar Tree [DLTR
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], he says. "They don't carry apparel at all." For a trade he recommends a long position.
"There's definitely a consumer retrenchment that's happened a lot more quickly than people think," observes Zach Karabell. "However I don't think investors will get hurt in Wal-Mart, but no place in this space is particularly high beta."
Other Disappointments
Meanwhile, Gap [GPS
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] reported a similarly dismal decline in same-store sales, which dropped 14% in December, well above analyst predictions of a 9.3% decline.
Luxury retailer Saks [SKS
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] also fared poorly; affluent shoppers were apparently spooked by the financial meltdown. Same-store sales dropped 19.8% for the month, worse than the 10% drop that Wall Street expected.
And J. Crew [JCG
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] cut its full-year outlook for the second time in three months.
Bright Spots
The retail landscape had a few bright spots.
At Macy’s [M
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], same-store sales fell 4% in December, less than the 5.3% decline expected by analysts.
Secaucus, N.J.-based retailer The Children’s Place [PLCE
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] said same-store sales were up 1% in December, beating forecasts.
And teen apparel company Aeropostale [ARO
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] also had a good month. The retailer reported a 12% increase in same-store sales for December.
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CNBC.com with wires
Data is a real-time snapshot *Data is delayed at least 15 minutes