By  on December 31, 2009

Retail stocks slid 0.5 percent Wednesday, limping into the final trading session of a year that, at least on Wall Street, marked a dramatic revival for the sector.

The S&P Retail Index fell 2.21 points to 416.27 Wednesday as the Dow Jones Industrial Average dipped just 3.10 points, less than 0.1 percent, to 10,548.51. With one day left, retail stocks rebounded 49.1 percent in 2009, outstripping the Dow’s 20.2 percent rally. After a turbulent and crisis-pocked 2008, equities benefited from the stabilization of credit markets, the rightingof the banking sector, the return of GDP growth and a general feeling that a second Great Depression had been averted.

Holiday sales, although up against an extremely weak season last year, appeared to lend credence to the notion that retailers are beginning to show signs of life, if not the actual bounceback their stocks have seen. According to MasterCard Advisors, retail sales for Nov. 1 through Dec. 24 rose 3.6 percent, a 1 percent increase after adjusting for calendar shifts.

But the downturn and the attendant changes in consumer psychology do seem to have reset the terms of the staring contest between stores and thrifty shoppers.

“Throughout the past year, consumers have shopped closer and closer to need or event, and [the] Christmas season 2009 was no different,” said Deutsche Bank broadline analyst Bill Dreher Jr. in a research note. “The weaker-than-expected November sales now appear to have been a false negative on the holiday season, as consumers waited until December and even the final week before Christmas to purchase gifts.”

And retailers seem to have prevailed.

Dreher said consumers were likely looking for better deals as Christmas approached but found that stores, which have been laser-focused on controlling inventories and costs this year, were able to avoid severe markdowns to move goods.

“In fact, consumers ran greater-than-usual risk of out-of-stocks, particularly of popular items-sizes,” he said. “The combination of better-than-expected sales and aligned inventories should drive healthy margins.”

Among the retail stocks on the wane Wednesday were Dillard’s Inc., 4.5 percent to $18.97; AnnTaylor Stores Corp., 3.5 percent to $13.81; Macy’s Inc., 2.4 percent to $17.22; Saks Inc., 1.7 percent to $6.79, and The Men’s Wearhouse Inc., 1.5 percent to $21.38.

In Europe, the FTSE 100 in London dropped 0.7 percent to 5,397.85 while the CAC 40 was off 0.6 percent to 3,935.50 in Paris. Hong Kong’s Hang Seng Index managed a 0.1 percent rise to 21,496.62 while, in Tokyo, the Nikkei 225 was off 0.9 percent to 10,546.44.

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