The carmaker issued the temporary “stop sale” within hours after the popular consumer magazine raised the handling problem. It reflects Toyotas attempt to respond more quickly to safety concerns after being castigated by the federal government for dragging its feet on recalls to address faulty gas pedals.

The decision to stop selling the SUV adds another stain to Toyotas safety reputation following the recall of more than 8 million cars and trucks worldwide over gas pedals that are too slow to retract or can become stuck under floor mats. Toyota faces a $16.4 million fine from the Transportation Department and has until April 19 to decide whether to contest the penalty.

The GX 460 is not covered by the pedal recalls.

“We are taking the situation with the GX 460 very seriously and are determined to identify and correct the issue Consumer Reports identified,” said Mark Templin, Lexus vice president and general manager.

Lexus will provide a loaner car for any customer who bought a 2010 GX 460 and is concerned about driving the vehicle, Templin said. Customers who have questions or concerns about the GX 460 can call Lexus at 800-255-3987.

Consumer Reports is closely read by many car buyers before choosing a new car or truck and has raised red flags over Toyotas before. In January, the magazine pulled its “recommended” rating on eight vehicles recalled by the automaker due to faulty gas pedals.

In this case, Consumer Reports said the Lexus problem occurred during tests on its track. In a standard test, the driver approached a turn unusually fast, then released the accelerator pedal to simulate the response of an alarmed driver. This caused the rear of the vehicle to slide outward.

Under normal circumstances, the electronic stability control should quickly correct the loss of control and keep the SUV on its intended path. But with the GX 460, the stability control took too long to adjust, which could cause a rollover accident if one of the sliding wheels were to strike the curb or another obstacle, said Gabriel Shenhar, Consumer Reports senior auto test engineer, one of four testers who experienced the problem.

The magazine said it is not aware of any reports of the GX 460 rolling over. It tested two separate vehicles, both of which experienced the problem, but neither rolled over.

The warning label on the model will remain until Toyota addresses the handling issue with the seven-seat SUV.

Templin said in a statement he was “confident that the GX meets our high safety standards” and said Toyotas engineering teams were testing the GX using Consumer Reports specific parameters.

Consumer Reports said the last vehicle to receive such a safety warning was the 2001 Mitsubishi Montero Limited, a large SUV. In that case, testers said the wheels lifted off the road during standard avoidance-maneuver tests, which also posed a rollover risk.

—

Strumpf reported from New York.

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School districts say its practically free money, and advertisers love the captive audience that school buses provide.

Thats the problem, say opponents: Children are being forced to travel to school on moving media kiosks, and the tactic isnt much different than dressing teachers in sponsor-emblazoned uniforms.

“Parents who are concerned about commercial messages will have no choice,” said Josh Golin, associate director of Campaign for a Commercial Free Childhood. “Parents wont be given the option to send their kids on the ad-free bus.”

Washington lawmakers considered the idea of school bus advertising this year, and the concept is also being tossed around in Ohio, New Jersey and Utah. About half a dozen states already allow bus advertising - including Colorado, Arizona, Florida, Minnesota, Tennessee and Texas.

The idea can be traced back about 15 years, but budget woes have led to a recent resurgence.

“This issue comes up on a regular basis when funding gets tight and people are looking for alternative ways to fund school transportation,” said John Green, supervisor for school transportation at the California Department of Education.

Green has a long list of reasons California has not sold ads on its school buses, despite the regular onslaught of creative parents and lawmakers who suggest the idea to him and other state officials.

He says bus ads are rarely as lucrative as the school district expects, they may distract drivers and lead to accidents, and keeping unwanted ads off buses may not be as easy as people think.

A highway authority in Southern California recently lost a court case over its attempt to prevent the Minutemen militia group from “adopting a highway” and putting a sign on the freeway. The judge decided the case on First Amendment issues.

“Im thinking that logic would hold for school transportation,” Green said.

Jim OConnell, president of Media-Aim of Scottsdale, Ariz., says school bus advertising can be lucrative and in five years of selling the ads for more than 30 districts in Colorado and Arizona, hes never once heard of accident tied to bus advertising.

That translates into about $7 a day per bus for the length of the contract, still a fraction of the districts total $959 million budget but important at a time when every dollar counts.

In addition to having its logo on 100 of the districts 350 school buses, First Bank also will be prominently displayed in every high school gym, on the district Web page, in district stadiums and company announcements will be made during most varsity sporting events.

“Its not as large a revenue generator as you might think,” said Mike Griffith, a policy analyst for the Education Commission of the States. Paying a consultant to sell the ads usually cuts the profits enough to discourage districts, he said.

School bus advertising has been getting some traction in the past two years, as it did during the 2001 economic downturn, said Griffith. His organization does not keep track of which states allow school bus advertising, but he noted that few states have legislation or rules that specifically disallow it.

Washington state Sen. Paull Shin, a Democrat who represents a district north of Seattle, raised the idea during the Legislature this year because the states $2.8 billion budget deficit was literally keeping him awake at night with concern about its affect on schools and students, he said.

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At Costello Sandwich and Sides in Chicago, which uses 10 to 15 cases of tomatoes a week and is now paying $25 a case instead of $15, customers can expect to get a bit less tomato on their sandwiches. The shop hasnt raised prices or stopped serving tomatoes altogether, but manager Matthew Villareal says he can see the tomatoes are soft when the prep cooks are cutting them.

“The tomato prices definitely have gone up and the quality isnt so great either,” he said. “We just kind of eat the cost.”

An unusually cold January in Florida destroyed entire fields of tomatoes - along with some green beans, sweet corn and squash. The cold scarred the tomatoes, damaged their vines, and forced many farmers to delay their harvest.

The average wholesale price for a 25-pound box of tomatoes is now $30, up from $6.50 a year ago. Floridas growers would normally ship about 25 million pounds of tomatoes a week; right now, theyre shipping less than a quarter of that, according to Reggie Brown of the Florida Tomato Growers Exchange, a tomato farmer cooperative in Maitland.

Some parts of Florida saw average temperatures so low that this January and February were among the 10 coldest on record, according to the National Weather Service.

“Anecdotally, from talking to some real long timers, as well as people who watch the weather, this has been the most extended cold in maybe 60 years,” said Terry McElroy, spokesman for the Florida Department of Agriculture.

Industry estimates suggest that about two-thirds of the tomato crop in the major southwestern production region was destroyed, according to a Feb. 25 United States Department of Agriculture report.

Theres more bad news, Brown said: Because of the continued cold weather - 38-degree temperatures were predicted Friday in some central Florida growing areas - the current crop of fruit isnt as far along as everyone had hoped.

“We thought theyd recover by early April, but now its mid- April,” he said.

And because high demand has driven up domestic prices, many wholesalers are buying from Mexico instead.

“Were obviously losing market share to Mexico, and theres always a price to pay to get the customer to get back into the Florida market,” Brown said.

At Subway restaurants, the timing of this years shortage was fortuitous: It hit right when the sandwich chain switches its tomato purchases from Florida to other regions.

While they so far havent been impacted, managers are ordering different varieties of tomatoes to keep supplies steady, a spokesman said Thursday.

McDonalds Corp., CKE Restaurants Inc., (which owns Hardees, Carl Jr.) and Darden Restaurants (the nations biggest casual dining chain, which owns Olive Garden, Red Lobster, Longhorn Steakhouse; Capital Grille; Seasons 52) said its business as usual and no shortages are being reported.

Some Wendys restaurants posted signs saying tomatoes would only be provided upon request because of limited availability.

But smaller restaurants are feeling the pinch. In Chicago, where a hot dog isnt a hot dog without chopped tomatoes, you might end up with just a bit less on the bun.

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The economic expansion is being fueled by gains in manufacturing and business investment that reflect growing demand from overseas and efforts to rebuild inventories. Americans, shaken by the loss of 8.4 million jobs during the recession, will probably be slow to regain the confidence needed to spearhead the next phase of the recovery.

“The good news is that consumers are still spending even though they are worried,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, who projected the rebound in sales and setback in confidence. “Spending is decent enough to provide a foundation for growth. For now, this is going to be a business-led recovery.”

Stocks fell today after China unexpectedly increased bank reserve requirements for a second time in a month to cool the worlds fastest growing major economy. The Standard & Poors 500 Index dropped 0.3 percent to 1,074.92 at 12:43 p.m. in New York. Treasuries climbed, pushing the yield on the benchmark 10-year note down to 3.68 percent from 3.72 percent late yesterday.

Stockpiles Drop

A third report today showed inventories at U.S. businesses unexpectedly fell in December for the first time in three months as companies couldnt keep up with increasing demand. Macys Inc. and Gap Inc. are among retailers driving profits up by keeping stockpiles lean after the biggest household spending slump in three decades.

Retail sales were projected to rise 0.3 percent, according to the median estimate of 82 economists in a separate Bloomberg survey. Forecasts ranged from a decline of 1 percent to a 0.7 percent gain. The Commerce Department also revised the December decrease in purchases to 0.1 percent from 0.3 percent.

Purchases excluding autos climbed 0.6 percent, also exceeding the survey median, which called for 0.5 percent gain.

“Consumers showed continued improvement,” said John Herrmann, chief economist at Herrmann Forecasting in Summit, New Jersey. “Consumers are still relatively cautious, spending what theyre making and not taking on debt.”

Broad-based Gains

Nine of 13 major categories showed gains in sales last month, led by general merchandise stores, grocery stores and non-store retailers.

Amazon.com Inc. reported Jan. 28 that its fourth-quarter profit and sales beat analysts estimates as shoppers took advantage of holiday discounts and free shipping.

Sales at 31 chains rose 3 percent last month, the International Council of Shopping Centers said Feb. 4, beating its forecast of a 1 percent gain. Lower inventories helped stores reduce markdowns, which boosted sales volume and profit margins, said Mike Niemira, the ICSCs chief economist.

Macys, the second-largest U.S. department-store company, last week said sales at stores open at least a year gained 3.4 percent in January, helped by online purchasing. The Cincinnati- based retailer said fourth-quarter profit exceeded its forecast.

Less Fear

“Were not seeing the fear factor we saw last year,” retail analyst Dana Telsey, founder of Telsey Advisory Group in New York, said in an interview on Bloomberg Radio.

The consumer sentiment index was forecast to rise to 75, according to the median of 74 economists surveyed by Bloomberg News. The measure averaged 88.9 during the expansion that ended December 2007.

Todays report showed the measure of current conditions, which reflects Americans perceptions of their own finances and whether its a good time to buy big-ticket items such as cars and homes, rose to 84.1 this month from 81.1 in January.

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The worlds largest automaker, founded by Toyodas grandfather in 1937, has discussed its strategy with the National Highway Traffic Safety Administration, said Brian Lyons, a Toyota spokesman. He didnt have details on when the fixes begin. Pedal parts from supplier CTS Corp. will be either replaced or new assemblies will be installed, he said.

Toyota aims to limit consumer fallout from 2.3 million U.S. vehicles its recalling for pedals that may stick. The company on Jan. 26 suspended sales of its top-selling Camry and Corolla cars in the U.S. and Canada and halted lines at five North American plants until CTS pedals are fixed. The flaw also sparked model recalls in China and of as many as 1.8 million autos in Europe.

“The possibility of having parts in the marketplace as early as next week is incredible, but its going to take months to get all these vehicles fixed,” said David Champion, director of automotive testing for Consumer Reports.

Shares Plunge

Toyota lost 14 percent of its market value last week as shares fell for a sixth day in Tokyo yesterday, down 2 percent to 3,490 yen. The automakers American depository receipts traded in New York fell 0.9 percent to $77.00 yesterday.

Toyota is putting together a marketing program to discuss how it plans to resolve the issue, Lyons said. He said he couldnt comment on reports that Toyota will publish an “open letter” in major U.S. newspapers tomorrow.

“Were making every effort to explain as soon as possible in language thats easy to understand,” Toyoda, 53, told NHK. “Were doing whats best for our customers, and they can drive our cars with assurance.”

Congressional Hearing

The House Energy and Commerce Committee is to hold a hearing Feb. 25 on the sudden acceleration of Toyota vehicles, which has been linked to 19 deaths in the past decade, said U.S. Representative Henry Waxman, a California Democrat and chairman of the panel. The House Committee on Oversight and Government Reform plans a separate Toyota hearing on Feb. 10.

Toyota has said its North American plants that make Camry, Corolla and Avalon cars; Matrix hatchbacks; Highlander, RAV4 and Sequoia sport-utility vehicles; and Tundra pickups are receiving replacement parts from CTS. The timing of shipping parts to U.S. dealers is still being assessed, Lyons said.

Unprecedented Sales Halt

Consumer Reports said in a statement yesterday that it temporarily suspended its “recommended” status for the eight Toyota models affected by the sales and production halt. That rating for General Motors Co.s Pontiac hatchback, a version of Matrix thats included in the recall, is also being suspended, the magazine said.

“In the automobile industry its unprecedented to have this many vehicles suspended from sale at one time,” Champion said.

In a separate action, Toyota in November said it would recall 4.3 million U.S. vehicles as a result of floor mats that may interfere with accelerator pedals, also causing sudden acceleration. A further 1.09 million U.S. vehicles were recalled for that issue this week.

CTS, based in Elkhart, Indiana, issued a statement yesterday to make clear that its parts werent linked to the November recall, which also involves Lexus vehicles and older Toyota models.

Consumer Lawsuits

Toyota faces at least seven lawsuits by individual plaintiffs claiming deaths or injuries caused by sudden acceleration. Since November, consumers have also filed at least seven lawsuits seeking class-action status against the company, including one yesterday.

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TNS Media Intelligence said Monday that a 30-second commercial during next months Super Bowl on CBS are selling for between $2.5 million and $2.8 million, based on reports from advertisers and media buyers. Thats a drop from last year, when ads averaged $3 million on NBC - a record, according to TNS. Prices remained strong last year because the majority of ads are typically bought in the spring, before the deepening of the recession, analysts said.

Final figures for this year will come in after the Super Bowl airs Feb. 7. CBS wont comment specifically about its prices, but company officials said they believe prices will be higher than last year.

“We dont calculate average price because its not how we manage the business, but were confident that if we did it would be higher than last year,” said CBS spokesman Dana McClintock. “In certain cases, were getting over $3 million” per spot.

McClintock said it was difficult to peg a lower end of the range of prices because clients who bought ads throughout the football season may get a lower rate.

Vacation rental Web site HomeAway was lured in for the first time by the prospect of lower prices. Its ad in the third-quarter of the game is its first television commercial. The company would not say what it paid for the ad.

“We certainly had a hunch that it wasnt going to be massively overpriced versus last year. We had a hunch thered be some wiggle room,” said CEO Brian Sharples, whose company is launching a yearlong campaign tied to the Griswold family of “National Lampoons Vacation” fame.

CBS officials said the pace of sales had been better than it was for NBC a year ago. As of Friday, only four of the 62 commercial slots remained to be sold.

CBS is keeping a few slots open so it can sell them at higher prices to last-minute buyers, said Bob Horowitz, president of Juma Entertainment and executive producer of television show “Super Bowls Greatest Commercials.”

He said putting a single number on Super Bowl ads is tricky because they are often bought in packages that can include other events like the Olympics.

The only other year that prices declined was from 2006 to 2007, when 30-second slots dropped from $2.5 million to just under $2.4 million, said Jon Swallen, senior vice president of research for TNS. Overall advertising spending fell slightly in the first half of 2007, even before the recession began.

Super Bowl prices crossed the million-dollar threshold in 1995, and topped $2 million five years later.

Ad prices spiked as viewership soared, going from 68.3 million viewers in 1981 to 87.2 million in 1986, according to Nielsen. Last years Super Bowl had a record 98.7 million viewers.

From 1990 through last year, the Super Bowl generated $2.17 billion of network sales, including 1,400 commercials from 210 advertisers, TNS said.

CBS wont say what it paid for the rights to the Super Bowl. The three networks that now alternate carrying the game, CBS, NBC and Fox, get it in a package along with the other football games they broadcast through the season.

NBC Universal has said it expects to lose money televising the Winter Olympics next month, mainly from the $820 million the company paid for the rights to the games. The company has said advertising sales were soft for much of past year, but they have increased as the Olympics draw near.

The 2009 Super Bowl brought in $213 million in advertising revenue - just for ads airing during the game. That was a 14 percent increase from the previous years $186.3 million, when the average 30-second slot cost $2.7 million.

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Hit products such as the +J line overseen by German designer Jil Sander led to a 40 percent surge in first-quarter sales, defying a slump in Japanese household spending amid job losses and falling wages. Chief Executive Officer Tadashi Yanai, Japans richest man, is expanding Uniqlo overseas with store openings in Europe, the U.S. and Asia.

“No one can follow Fast Retailing,” Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo. “Uniqlo clothes are fashionable and attractive so they dont bore customers.”

The retailer, which competes with Inditex SAs Zara and Hennes & Mauritz ABs H&M brands, raised its full-year sales forecast to 820 billion yen from an earlier estimate of 798 billion yen.

Japan Sales

Fast Retailing raised its full-year forecast for its Uniqlos same-store sales in Japan to a 6.2 percent increase from 3 percent.

Fast Retailing doubled Asian stores outside Japan last quarter, opening 11 stores in China and 13 in South Korea. The +J brand also helped boost Uniqlo sales in the U.K., the company said.

Fast Retailing rose 1.4 percent to 16,900 yen at the 3 p.m. close on the Tokyo Stock Exchange before the company released earnings. The stock rose 35 percent last year, outperforming a 19 percent increase in the benchmark Nikkei 225 Stock Average. Fast Retailing surged 63 percent in 2008.

First-quarter net income increased 57 percent to 34.9 billion yen, with sales of 263.5 billion yen from 188.5 billion yen a year earlier.

Domestic sales at Uniqlo stores open at least a year surged more than 30 percent in September and October and gained 7.9 percent in November. The company had 770 directly operated stores in Japan at the end of last month.

The companys performance contrasts with other Japanese retailers. Seven & I Holdings Co., operator of the 7-Eleven convenience-store chain, and Aeon Co., the biggest-supermarket operator, both posted declines in nine-month revenue yesterday.

Japan Recession

Salaries have dropped for 18 straight months and the nations retail sales are down for the last 15 months as Japan emerges from its worst postwar recession.

The retailer last year said it aims to boost sales to 5 trillion yen by 2020, with China, the U.S. and Europe, and Asia excluding Japan and China, each accounting for 1 trillion yen of revenue.

Based in Yamaguchi, western Japan, the company also owns brands including Princesse tam.tam, Theory and Comptoir Des Cotonniers, Zazie and Enracine.

In October, Fast Retailing opened a store in Paris across the road from the Galeries Lafayette department store. It also expanded its outlet in Tokyos Ginza shopping district by 50 percent.

Yanai, who has said hes prepared to spend as much as 400 billion yen on acquisitions, was outbid by Dubai investment firm Istithmar PJSC for Jones Apparel Group Inc.s Barneys New York chain in 2007. Yanai is Fast Retailings biggest shareholder with a 27 percent stake and he and his family were worth $6 billion last year, according to Forbes.

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“Calorie posting causes consumers to not only substitute products within stores, but also to substitute across stores,” the authors said. “Consumers who were routinely purchasing coffee and donuts at Dunkin Donuts may have switched to buying coffee at Starbucks when confronted with the calorie content of donuts.”

Bryan Bollinger, Phillip Leslie and Alan Sorensen from Stanfords Graduate School of Business in Stanford, California, used data from Seattle-based Starbucks, the worlds largest coffee-shop operator, to study the impact of mandatory calorie posting on consumers purchase decisions.

Food for Thought

The calorie information had a negligible impact on beverage choices at the 222 Starbucks stores in New York City and led consumers to buy fewer food items or switch to lower-calorie ones, the researchers said.

While the calorie disclosures didnt cause a statistically significant change in Starbucks overall sales, the researchers found that revenue increased by 3 percent at the coffee sellers 37 stores located near a Dunkin Donuts, a chain owned by Dunkin Brands Inc.

A spokeswoman for Canton, Massachusetts-based Dunkin Donuts didnt immediately return voicemail messages left after office hours.

Nutrition labeling on packaged food has been mandatory in the U.S. since the early 1990s, and health officials are increasingly targeting mandatory posting of calories on restaurant menus to fight obesity, according to the study. In 2008, 26.6 percent of Americans were obese, rising from 15.9 percent in 1995.

“Our Starbucks data in the Stanford study helped to raise visibility on the issue of a national menu labeling standard,” Jill Knisley, a Starbucks spokeswoman, said in an e-mail. “Implementing a national or global standard is costly and complex. From our perspective, the regulations and standards should be uniform to enable customers to consistently compare products and make informed choices.”

For Related News and Information: Top health stories: HTOP <GO> Top stories on consumer products: TOP CONS <GO> Most-read health stories: MNI HEA <GO> Starbucks earnings: SBUX US <Equity> TCNI ERN <GO> Starbucks sales breakdown: SBUX US <Equity> PGEO <GO> Restaurant earnings: TNI RES ERN <GO>

Last Updated: January 7, 2010 00:55 EST

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“They all did execute pretty well in response to the slowing consumer,” said David Abella, a portfolio manager with Rochdale Investment Management LLC in New York who holds shares of Aeropostale and Nordstrom. “If retail sales pick up broadly, they should get outsized gains at the expense of competitors.”

Teen retailer Aeropostale boosted sales by offering $10 hooded sweatshirts for two hours on Black Friday, the biggest shopping day of the year. By contrast, Abercrombie & Fitch Co.s main holiday promotion was a $25 gift card on $100 in purchases, more than customers were willing to spend, said Thomas Weisels Dunn. Nordstrom made fewer cuts to inventory to capture more revenue than Saks Inc., the luxury retailer that reported a 26 percent drop in November same-store sales.

Consumer confidence improved for a second month in December, from a record low in February after unemployment and cratering home values led to a freeze in spending. Retailers sales may increase as much as 3.5 percent next year, the International Council of Shopping Centers forecast yesterday.

Balancing Act

Aeropostales sales for the day of the sweatshirt promotion and the following Saturday rose 10 percent from a year earlier at comparable stores and gross margins, a measure of profitability, also increased, the New York-based company said.

“Our success this year has come from focusing on the right gift items and balancing fashion and value,” President Mindy Meads, 57, who will become co-chief executive officer next month, said in a telephone interview.

Abercrombie & Fitchs gift-card offer, which started Nov. 24, is the promotion on which Abercrombie has focused the most, said Eric Cerny, a spokesman for the New Albany, Ohio-based company. He declined to comment on its results.

Aeropostale, Nordstrom and Kohls sell basic clothes like sweaters, coats, boots and pajamas that have topped consumers gift lists in the economic slowdown, according to retail analysts. Shoppers planned to purchase those items because they are practical, according to a survey conducted last month by the ICSC, a New York-based trade group.

“They are rewriting the playbook a bit,” Dunn at Thomas Weisel said. “The emphasis on value is certainly something new and something we have not seen in the last 10 years.”

No Leftovers

While retailers focused on promotions, they also reduced inventory to avoid the markdowns of as much as 80 percent they had to make on leftover merchandise last year. Saks may have cut too deeply and missed out on sales, said Craig Johnson, president of New Canaan, Connecticut-based consulting firm Customer Growth Partners LLC.

“Nordstrom is doing better because they cut inventory back just a little bit,” Johnson said. “They are not taking a meat cleaver to it.”

Trimming Inventory

Nordstroms inventory fell 6.7 percent as of Oct. 31, compared with a 21 percent drop at Saks. Nordstrom may also report an increase in fourth-quarter gross margin, Barbara Wyckoff, an analyst at Jesup & Lamont in New York, said in a Dec. 18 note. She recommends buying Nordstrom shares.

“Weve been encouraged by our sales results,” said Colin Johnson, a spokesman at Seattle-based Nordstrom.

Saks is comfortable with its inventory levels, said Julia Bentley, a spokeswoman. The cuts helped the company post a profit in the third quarter, compared with a year-earlier loss.

The 30-member Standard & Poors 500 Retailing Index has gained 50 percent this year as improving consumer sentiment helped chains. Nordstroms stock almost tripled, outpacing Sakss 58 percent rise this year. Aeropostale more than doubled, compared with Abercrombie & Fitchs 54 percent gain. Kohls, based in Menomonee Falls, Wisconsin, increased 53 percent.

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Thats good news for their bottom lines. But it means slim pickings for shoppers hoping for after-Christmas clearance sales. Shoppers looking for big sales should act quickly because there are relatively few leftovers to clear out.

“Retailers are much more nimble this year,” NPD analyst Marshal Cohen said. “Their Plan B is to have new receipts at the ready.”

Cohen said he noticed J. Crew and Coach were two that had restocked shelves with new items last week.

Because their ordering was in line with weak demand, retailers were able to sell more items at higher prices, which is critical to profits. Last year, profits were hammered by fire-sale discounts to get rid of the excess.

“The latest holiday shopping season wasnt a rip-roaring success, but at least it met or slightly exceeded expectations,” said John Lonski, chief economist of Moodys Capital Markets Research Group. “Consumer spending is indeed in a recovery mode, which brightens prospects for 2010.”

Spending rose 3.6 percent from Nov. 1 through Dec. 24 compared with the same period last year, according to MasterCard Advisors SpendingPulse, which estimates all forms of payment including cash. Adjusted for an extra shopping day between Thanksgiving and Christmas, the number was closer to a 1 percent rise. That was still better than the flat sales analysts had predicted.

Some retail stocks rose on Monday. American Eagle Outfitters shares rose 48 cents, or 3 percent, to $16.80. Macys Inc. shares rose 19 cents to $17.76. J.C. Penney shares rose 36 cents to $27.38.

Amazon.com Inc.s shares rose 84 cents to $139.31, buoyed by SpendingPulse numbers that showed online sales rose 15.5 percent.

The Dow Jones U.S. Retail Index edged up less than 1 percent.

After-Christmas traffic also appeared to be relatively robust, though it wasnt clear how much people were actually spending.

Roth Capital Partners analyst Elizabeth Pierce visited six malls Saturday in southern California and saw many shoppers without bags. Its likely shoppers who went looking for bargains left without buying much, she said.

Bessie Lyles of Huntsville, Ala., arrived at Lenox Square Mall in Atlanta at 6 a.m. to hunt for deals. The 57-year-old left Macys with two tops, sweaters and two pairs of jeans, including one pair for $4, marked down from $34.

In order to entice shoppers like Lyles through the rest of the week and into January, retailers are expected to steeply discount what leftovers they do have.

After last years dismal season, when unplanned discounts 70 percent off or more began appearing well before Christmas, retailers vowed they wouldnt get caught that way again.

This year the tight control let retailers mostly keep discounts planned, said FBR Capital Markets analyst Adrienne Tennant.

NPDs Cohen said the season was good enough for most retailers to survive, though many could shutter underperforming stores.

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