Weak spending in the run-up to Christmas raised concerns about retailers' profits and dragged down their shares Wednesday.
A MasterCard Advisors SpendingPulse report found that sales of popular holiday items, such as electronics, clothing, jewelry and home goods, rose 0.7 percent compared with last year. The report, released Tuesday, tracked spending from Oct. 28 through Dec. 24.
That's below the healthy 3 to 4 percent growth that analysts had expected and is the worst year-over-year performance since 2008, when spending shrank sharply during the recession.
U.S. shoppers' restrained spending could be a big blow to retailers, because November and December account for up to 40 percent of annual sales for many retailers. If those sales don't materialize, stores are forced to offer steeper discounts. That's a boon for shoppers, but it cuts into stores' profits.
Stores had already been discounting to lure shoppers in the days before Christmas.
This year's holiday shopping scene was complicated by Superstorm Sandy's blast, as well as other bad weather, and economic concerns about the possible tax increases and spending cuts early next year. Some analysts also say the massacre of schoolchildren in Newtown, Conn., earlier this month may also have chipped away at shoppers' enthusiasm.
Retail stocks fell broadly Wednesday, from department stores to bookstores to luxury jewelry sellers. Here's a sample of the activity:
— Abercrombie & Fitch Co. fell 3.4 percent to $45.49
— Barnes & Noble Inc. shares fell 2.7 percent to $14.62
— Coach Inc. shares fell 5.3 percent to $54.45
— Gap Inc. shares fell 2.8 percent to $30.49
— Kohl's Corp. shares fell 2.2 percent to $42.51
— Macy's Inc. shares fell 2.3 percent to $36.65
— Nordstrom Inc. shares fell 2 percent to $51.37
— Ralph Lauren Corp. fell 3.9 percent to $145.22
— Target Corp. shares fell 1.2 percent to $58.78
— Tiffany & Co. shares fell 2.3 percent to $57.01
— TJX Cos. Fell 2.1 percent to $41.32
— Urban Outfitters Inc. fell 2.5 percent to $38.30
Still, retailers have time to make up for some lost ground. The final week of December accounts for about 15 percent of the month's sales, said Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse.