Jan. 6 (Bloomberg) -- Purchases at U.S. retailers declined last week as post-Christmas markdowns failed to overcome what may have been the worst holiday shopping season in four decades.

Sales at stores open at least a year dropped 0.8 percent in the seven days through Jan. 3, the International Council of Shopping Centers and Goldman Sachs Group Inc. said today in a statement. ICSC Chief Economist Michael Niemira said November- December sales declined as much as 2 percent.

Macy’s Inc., Talbots Inc., Aeropostale Inc. and other retailers offered discounts of 65 percent or more on some sweaters, jewelry and pants to clear out merchandise after Christmas. Higher markdowns may put more pressure on earnings.

“December was relatively chaotic in price, with more discounts than retailers planned, especially in department stores,” Richard Hastings, a consumer strategist at Global Hunter Securities LLC of Newport Beach, California, said in a telephone interview. “Consumers have discovered that the industry is responding with lower and lower and lower prices.”

Gap Inc. and Macy’s are among retailers reporting December same-store sales Jan. 8. The ICSC, which studies sales at about 40 chains, will also release its final tally for the month that day. Some investors consider comparable-store sales the best measure of results because they exclude the effect of location openings and closings in the past year.

‘Major Catalyst’

Jan. 8 will be “a major catalyst day for the sector with retailers giving the first insights into holiday sales and fourth-quarter earnings,” Hastings said.

The Johnson Redbook Index, another measure of retail performance, fell 1.3 percent last week, compared with a year earlier. Retailers offered more discounts in December than they had planned, New York-based Redbook Research Inc. said today in a statement. The report measures sales at about 9,000 stores.

Half of consumers spent less this holiday season than in 2007, the ICSC and Goldman Sachs said. The poll of 1,000 households was conducted Jan. 2 to Jan. 4 by research firm ORC.

The ICSC predicted same-store sales would drop 1.5 percent to 2 percent in the last two months of the year. That would be the largest decrease since at least 1970, when the trade group started tracking shifts from the previous year. November sales dropped a record 2.7 percent.

Shopper Traffic

The New York-based council said December sales decreased by about 1 percent. Last week, the ICSC said they may fall at least 1 percent. The number of customer visits to stores last week was better than expected, Niemira said in an interview today.

Last month accounted for about half of most retailers’ fourth-quarter sales, according to Betty Chen, an analyst at Wedbush Morgan Securities in San Francisco.

Continuing worries about job losses, housing and the economy kept consumers “at bay” even with “aggressive markdowns,” Chen wrote yesterday in a research note.

The Standard & Poor’s 500 Retailing Index shed 32 percent last year, with only three of its 27 companies rising.

The index doesn’t include Wal-Mart Stores Inc., the world’s largest retailer, which fell 50 cents to $56.02 at 4 p.m. in New York Stock Exchange composite trading. Wal-Mart’s 18 percent gain in 2008 made it the year’s best performing stock in the Dow Jones Industrial Average.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.

Last Updated: January 6, 2009 16:16 EST