Profit-gutting discounts brought out hordes of customers in the last couple weeks of the holiday shopping season, but the late crowds couldn't keep 2008 from going into the record books as one of the toughest in decades.

Sales in the key November to December period fell 2.2 percent compared with the same period last year, marking the weakest holiday season since the International Council of Shopping Centers began keeping records almost 40 years ago.

As if a flailing economy and dicey job market weren't enough, winter storms that hit parts of the country added to the problems. "This has been the most challenging economic environment in memory," said Macy's Chairman Terry J. Lundgren, an assessment with which other retail executives concurred.

December's sales results were a little better than the previous month's, according to the New York-based trade group which bases its analysis on results from almost 40 chains. Sales slipped just 1.7 percent in December, compared with 2.7 percent in November.

Chains from Target to Macy's to J.C. Penney's yesterday reported they were busiest in the last two weeks of the month as they used discounts to clear the shelves of inventory.

Maybe that strategy was better than being forced to hold massive January clearance sales, but it was costly. Target noted reducing prices during the month helped it gain market share and clear out inventories, but profit margins will be pressured.

Nordstrom actually did better than officials had expected, but the company said intense markdown pressure industrywide means it doesn't expect to meet earlier announced earnings guidance.

In fact, yesterday brought a chorus of warnings to Wall Street. Other retailers that lowered earnings projections included discount giant Wal-Mart, luxury retailer Saks and department store operator Macy's.

Macy's did note that many of its best performances came in markets piloting a new "My Macy's" program meant to tailor store assortments to the taste of customers in a particular area. The retailer's Pittsburgh stores have been a part of that initiative, although the company didn't break out results by region.

Meanwhile, South Side-based teen retailer American Eagle Outfitters slashed quarterly guidance from 30 to 36 cents per share down to 19 to 21 cents per share after the company's promotions failed to drum up traffic even during key holiday shopping periods. Last year, the retailer earned 66 cents per share during the comparable period.

Sales at its established stores fell 17 percent in the five weeks ended Jan. 3, with total sales down 10 percent to $493.5 million. The namesake American Eagle stores continue to struggle, with the women's clothing sales especially slow.

On the bright side, officials said their newer Martin + Osa chain, which targets an older customer, showed a significant increase in same-store sales, and their aerie stores selling intimates and dormwear also saw a spike.

In addition to cutting back on spending, shoppers didn't buy as many gift cards, according to an analysis by Michael P. Niemira, chief economist for the shopping centers group. He said people were enticed by discounts on goods and wary of buying gift cards for retailers that might run into financial trouble.

Last year brought a number of retail bankruptcy filings, including the KB Toys filing in December and Circuit City in November, and a number of experts have predicted more may be coming.

With gift card purchases down, less holiday business is likely to spill into January. Few chains were predicting much improvement in sales in January, but Columbus, Ohio, retail consultant group TNS Retail Foward saw some sign that the market may be bottoming out.

"It's encouraging that most retailers saw some improvement in their numbers compared with November," said Frank Badillo, senior economist, in an analysis. "In the case of Wal-Mart and others, the new weakness largely reflected the impact of weather, lower gasoline prices and even exchange rate effects."

Wal-Mart reported a 1.9 percent increase in sales at stores at least 1 year old.

Warehouse club operator Costco Wholesale Corp., which reported a same-store sales drop of 4 percent, said both falling gas prices and shifting foreign exchange rates hurt its sales results.