Retailers appear to have been rescued at the last minute, according to data from the International Council of Shopping Centers. Shoppers looking for deals the week before Christmas -- and making up for the day lost to stormy weather on the East Coast -- spent aggressively, sparing the retail sector a dismal 2008-like performance.

The healthy conclusion to the holiday season led to a positive change from November and made December one of only three months (including September and October) in which retail sales increased year-over-year.

The first estimates for the holiday shopping season have come in. MasterCard (MA) Advisors unit SpendingPulse, which tracks retail spending, puts the result at a year-over-year increase of 3.6%. This includes all form of payment and does not factor in gas and auto sales. The increase comes relative to the 2008 holiday season, which was the worst season in decades for retailers thanks to the global financial crisis.

Says Kamalesh Rao, director of economic research at SpendingPulse, "Last year the economy and consumer spending were in free fall. This year we're talking about an environment that has stabilized, that has seen a leveling off." But, that doesn't mean it's turned the corner yet. Holiday spending isn't enough to cure what ails us.

The holidays have ended, and the real sales have begun. Those choosing to sacrifice sentimentality for savings found retailers only too willing to help, as prices were slashed in the wake of the Christmas rush. Recipients of gift cards stand to see their purchasing power extended, as well, now that redemption time has arrived, and retailers are looking to squeeze in any extra sales they can to pump up their top lines before the books close on the fiscal year, which, for many, comes at the end of January.

Toys "R" Us has offered a deal on Nintendo (NTDOY) Wii games, with the second coming at half price, and Target (TGT) is nearly halving the price of wine glasses and dropping the tag on an argyle women's sweater by nearly a third. Walmart (WMT), which kicked off its cuts at the end of September, is throwing a $50 gift card on top of any Microsoft (MSFT) Xbox 360 buy.

Sluggish retail sales in November didn't stop retailers from adding bodies. A report by outplacement consulting company Challenger, Gray & Christmas, reavealed to BloggingStocks, shows that retail sector payrolls grew to 321,300 in November, an improvement from the previous month's 233,700. This follows 54,200 retail hires in October, bringing the total number of seasonal retail employees up to 375,500. Already, that comes close to the 384,300 hired from October through December in 2008. The analysis is based on data supplied by the Department of Labor.

High expectations for the holiday season likely contributed to the up-tick in hiring. The estimated 0.5% growth from Black Friday 2008 to Black Friday 2009 was a disappointment, and November sales were off 0.3%, surprising analysts, who expected the trend to go in the other direction. Costco (COST) and Limited Brands (LTD) came out ahead, but most retailers, including Target (TGT) and Macy's (M) struggled. Saks (SKS) is also suffering from an anemic luxury goods market.

Upscale shoppers aren't doing enough for Saks (SKS) this holiday season. The luxury retailer, which has been struggling with sales for the past two years, is moving into less expensive products as a way to bring customers in the door, even though it's putting its brand at risk. If the wealthy continue to stay at home, Saks will have to look for revenue where it hasn't had to play in the past.

Brand experts, according to a Reuters report, don't think it's a good idea for Saks to stray from its traditional area of expertise. Pushing lower-priced items and using gift cards and coupons to bring people inside -- not to mention discounting -- could cost the company in the long term. Milton Pedraza, chief executive of the Luxury Institute, told Reuters, "All these tactics erode the halo effect of a luxury brand."

Two months of momentum and Black Friday weren't enough to make November a winner for retailers. The holiday shopping season kickoff was up only 0.5% year-over-year, and the month as a whole saw retail sales fall 0.3% year-over-year. As if the drop weren't bad enough, it's a decline on top of last year's November retail freefall, which means we went from bad to worse.

Meanwhile, analysts had expected a strong increase. U.S. government data on retail sales isn't due to be reported until December 11, 2009, and it's expected to be a better indicator of the sector's performance. The data released Thursday doesn't include sales by Wal-Mart (WMT).

Consumer borrowing fell for the eighth straight month in September. This record-setting streak is due largely to tightening by lenders, unemployment and the conservative preference to pay down debt rather than spend. This widespread fit of fiscal responsibility, economists fret, could prevent a recovery from taking root, since consumer spending is responsible for 70% of the U.S. economy. This conventional thinking, of course, overlooks the fact that an eventual increase in spending that isn't fueled by consumer spending will yield a recovery that's more likely to last.

According to the Federal Reserve, borrowing fell at an annual rate of $14.8 billion in September -- it's biggest drop since July and much larger than the $10 billion predicted by economists. The behavior is exactly what you'd find in people worried about losing their jobs or focused on rebuilding safety funds and investment portfolios. Those who want to borrow are finding banks won't be complicit this time, as they clamp down on lending practices.

There's a chill in the air and a slight up-tick in confidence. Holiday discounts are coming a bit earlier, too. For retailers, this has been a great combination, leading to the second consecutive month in which retail sales increased.

This follows more than a year of drops. Consumers aren't going crazy, but they are loosening their wallets a little bit. Consumer spending accounts for 70% of the U.S. economy, and the coming holiday season is where the action is -- for the retail sector and, consequently, for everyone else.

If you made a bet on the specialty retailers leading up to the first $600 taxpayer rebate stimulus package, you got hammered.

Talk about a government plan backfiring big time.

That $300 billion in checks that fell out of the sky from government helicopters back in the March to May timeframe didn't find its way to the malls at all.

Instead, people paid down credit card debt, and tuition, medical and other bills, leaving little for spending on non-essentials.

The result was a litany of store closings nationwide, with several old-line, brand-name retailers going out of business.

It's game over for names like Circuit City (OTC: CCTYQ), Cache (NASDAQ: CACH), Talbots (NYSE: TLB), J. Jill, Wickes Furniture, Levitz, Bombay, Linens 'n Things, Movie Gallery, Wilson Leather, KB Toys and The Sharper Image.

Traders that leveraged into darling names, like hedge fund idol Eddie Lampert's Sears Holdings Corp. (NASDAQ: SHLD), got smoked. Shares of SHLD were trading at $105 when the checks when out. Today the stock is around $40.

Even Costco (NASDAQ: COST) -- the obvious slam dunk, aside from Wal-Mart (NYSE: WMT) -- got slammed, falling from $75 to $45 following the so-called stimulus package.

For anybody who's been following the downfall of Sharper Image, there seems to be a pretty obvious lesson: when people are worrying about the rising cost of food and are scrimping to fill their gas tanks, high-priced doodads and assorted electronic gewgaws are the first things to go. The next things, of course, are luxury goods.

Saks Fifth Avenue (NYSE: SKS)and Neiman-Marcus, two of the bigger high-end retailers, reported massive quarterly profit gains in the end of 2007, but are now acknowledging that their gains have reduced considerably in 2008. Obviously, part of this is the standard post-Christmas drop, but there has also been a significant slowdown in year-to-year growth. In 2008, Saks is anticipating a minor increase over 2007's sales, but a slight decrease in gross margin.

Part of this is due to a reduction in expenditures by "aspirational shoppers," or people who can't really afford super-luxe items, but occasionally buy them anyway. What's particularly interesting, though, is that super-rich customers are also cutting back on their purchases, a trend that some analysts attribute to a contagious feeling of economic worry. In other words, the overall belief that the economy is approaching a recession is reducing spending even among people for whom the economic slowdown isn't a pressing concern. In light of this trend, Saks' stock price has dropped from almost $21 in the beginning of the year to under $13.

In this context, it looks like the next year will be tough for manufacturers and importers of high-end luxury items. After all, if the people who can actually pay top dollar are cutting back, what will happen to the people for whom luxuries are a splurge?

New York-based Saks Inc. (NYSE: SKS), the operator of Saks Fifth Avenue department stores, reported that its fourth-quarter profit almost doubled, helped by solid sales, cost controls, and one-time gains.

Earnings came to $39.5 million, or 26 cents per share, during the period that ended February 2, compared with $21.5 million, or 14 cents per share, in the same period of the prior year. Sales rose almost 5% to $999.7 million in the fourth quarter. Analysts had expected EPS of 20 cents on revenue of $993.61 million, according to a survey by Thomson Financial.

For the year, Saks earned $47.5 million, or 31 cents per share, compared with $53.7 million, or 40 cents per share, a year earlier. Sales rose to $3.28 billion, almost 12% higher than the previous year.

"I remain very positive about the long-term prospects for the luxury sector and specifically for our Saks Fifth Avenue business, " said Chief Executive Stephen Sadove. However, privately-held Neiman Marcus Inc., which reported fiscal second-quarter results today, saw only a modest rise of 8% in profits and 6% in revenue.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

Financial Data

An examination of the financial data indicates that Saks Inc. (NYSE: SKS), with a market capitalization of $2.2 billion, is up about 15% to $20.50 so far in 2007. Meanwhile, Nordstrom Inc. (NYSE: JWN) has not fared as well: Nordstrom, with a market capitalization of $10.9 billion, is up about 3% to $50.80.

Products

In general, Nordstrom appears to carry a wider product line than Saks. One example would be women's apparel, where Nordstrom's line was more-extensive. Nordstrom also offered cocktail dresses in the $140 to $160 range, whereas Saks did not. That said, Saks appeared to do a better job at dress line selection: their line of black dresses was exceptional, with both contemporary and modern styles displaying eye-catching, striking/confident characteristics. Further, Saks appeared to be willing to reach slightly into Nordstrom's zone by offering black dresses as low as $180 to $200. Otherwise, Saks remained in its price zone, which was substantially higher, across apparel lines, than Nordstrom.

And that's perhaps another distinguishing characteristic between the two upscale retailers. While both Saks and Nordstrom serve the high-end consumer, Saks stays there, while Nordstrom carries many lines for the "mid-range" high-end consumer. One example here would be women's handbags: Nordstrom had several lines and styles (including leather bags) in the $200 to $300 range, whereas Saks for the most part remained in the stratosphere, with handbags above $800. Further, bag prices at Saks quickly moved above $1,200. That said, Saks, again, appeared to best Nordstrom in women's handbags; their Dolce & Gabbana and Bottega Veneta lines offered contemporary-yet-functional characteristics for that smart and sophisticated professional look.