By  on January 16, 2002

WASHINGTON -- Despite the recession and the economic malaise following the terrorist attacks, sales at apparel and accessories stores and department stores gained slightly in December by a seasonally adjusted 2.6 percent, to $14.22 billion, the Commerce Department reported Tuesday.

Compared with December 2000, however, sales declined 0.4 percent. For the full year ending Dec. 31, sales at apparel and accessories stores rose 0.5 percent, to $169.32 billion.

"This is directly a function of promotional sales," said Rajeev Dhawan, director of economic forecasting at Georgia State University. "During the holiday season in December, the war on terrorism progressed well+and that lifted the mood of consumers."

Charles W. McMillion, chief economist at MBG Information Services, noted that it was a weak year, but "it ended on a good note in December."

"We know that sales came at the expense of retailers severely cutting profits on top of many months of price cuts, and there were last-minute price cuts going into+Christmas that helped move inventory," he said.

Overall retail sales -- excluding food services -- dropped 0.3 percent, to $267.24 billion in December. Compared with December 2000, overall retail sales rose 3.8 percent.

Department store sales, excluding leased departments, posted a slight increase of 0.6 percent in December, to $19.95 billion, and a gain of 2.8 percent against December 2000. For the year, department store sales were even with 2000, at $236.79 billion, according to McMillion. General-merchandise store sales also gained slightly in December by 0.5 percent, to $35.30 billion.

Despite the uplift in December, Dhawan expects sales to fall in January and February.

"How many more sales can they have?" he asked rhetorically. "After a point, profitability becomes an issue."

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