New York Wal-Mart Stores Inc., Gap Inc., J.C. Penney Co. and other retail stocks fell Monday on concern that steeper-than-expected price markdowns would be needed to combat sluggish consumer traffic in U.S. stores this holiday.
Wal-Mart shares fell $3.06, or 5.6 percent, to $51.38 after the world's largest retailer said sales fell short of projections in the week ended Friday. Sears, Roebuck & Co., the biggest U.S. department-store company, fell 34 cents to $34.77 as it said sales this month are tracking below forecasts.
Shopper traffic has tailed off since the strong turnout of Thanksgiving weekend. Some analysts blame higher fuel prices, increased interest rates and recent volatility in the stock market. Others say that with Christmas falling on a Monday this year, shoppers are simply procrastinating, knowing they have a full weekend before the holiday to make purchases.
Compared with last year, shopper traffic from Nov. 24 to Dec. 9 was 3.8 percent lower in department stores and down 0.5 percent in malls, according to the National Retail Federation trade group and customer-traffic monitor RCT Systems Inc.
"Last year was a blockbuster for the retail industry; it may be difficult to repeat," federation President and Chief Executive Tracy Mullin said. "However, we have every reason to believe that traffic will increase significantly as Dec. 25 nears."
Specialty-clothing chains such as Gap and Abercrombie & Fitch Co. reduced prices on sweaters last week to lure shoppers, Deutsche Banc analyst Marcia Aaron said. Price markdowns limit the amount of profit made on each sale.
Results from this past weekend will help retailers decide whether to cut prices more or to hold out for the expected surge in business later this month.