Holiday Sales Fail to Bail Out Retailers

U.S. stocks fell on Thursday after most retailers posted weak retail sales and reduced their earnings outlook, even after denting margins with heavy discounts to lure consumers. Bellwether Wal-Mart (WMT - Snapshot Report) missed Wall Street expectations on December same-store sales and guided to a dismal fourth quarter.

Wal-Mart blamed snowstorms during the crucial holiday season for forecasting quarterly earnings between 91 cents to 94 cents a share, down from a prior view of $1.03 to $1.07. Although Wal-Mart was one of the few retailers that posted comparable-store sales growth for the month of December, the 1.7% increase still fell short of analysts’ estimates. The retailer fell more than 8% to $50.31 after the announcement.

Rivals Target (TGT - Snapshot Report) saw December same-store sales falling 4.1%, while comps were down 4% at Macy’s (M - Snapshot Report). Both the companies warned of lower profits in the fourth quarter. Gap (GPS - Analyst Report), Abercrombie & Fitch (ANF - Analyst Report) and jeweler Zale (ZLC - Snapshot Report) also painted a gloomy picture for investors.

The Dow Jones Industrial Average recently was down 90.40 points, or 1.03%, at 8679.30. The S&P 500 fell 6.61 to 900.04, while the Nasdaq Composite Index dropped 4.81 points to 1593.92 at late noon.