US stores have blue Christmas

Asda may be powering ahead but its parent Wal-Mart and fellow US retailers have had a tough Christmas season.

On Boxing Day, Wal-Mart cut its estimates for sales growth in December from 3%-5% to 2%-3%.

Even though sales had taken off in the weekend before Christmas and into Christmas Eve - with sales of more than $1bn on two of those days - it was not enough to offset a slump earlier in December.

This bad news was underlined yesterday when Home Depot, the world's second largest retailer behind Wal-Mart, saw its shares fall to six-year lows on Wall Street. The DIY chain disclosed late on Thursday that December sales were 10% lower than 2001. It warned that full-year earnings would be lower than expected and said it had little hope for improvement in 2003.

Radioshack, the largest retailer of mobile phones in the US, also cited sluggish holiday sales as it cut forecasts for fourth quarter profits yesterday. The warning hit the main mobile phone networks in the US with Sprint PCS shares falling 7%.

The bad news from retailers put the brakes on a rally from the Dow Jones. At mid-day, the index was 30 points lower at 8577.

Analysts had been expecting Home Depot to report a decline in December sales of between 3% and 5%. The business operates more than 1,500 stores in the US, Canada and Mexico.

"Business trends indicate the likelihood of a challenging environment well into the next fiscal year," said chairman and chief executive Bob Nardelli. He said the retailer would focus on developing new product lines and refurbishing existing stores.