U.S. retailers ended 2001 with a reprieve from the troubles that have plagued them for most of the year as frigid temperatures across much of the nation boosted sales of apparel and winter-weather merchandise.

The Arctic chill of the past couple of weeks followed an unseasonably warm November that put a crimp in holiday sales.

This year's shrinking economy, a spike in the U.S. jobless rate and fallout from the Sept. 11 attacks on two major U.S. cities have also contributed to the slowdown in consumer spending.

U.S. chain store sales rose a modest 0.9 percent in the seven days ended on Saturday, following a 2.9 percent rise one week earlier, the Bank of Tokyo-Mitsubishi and UBS Warburg reported in their Weekly Chain Store Sales Snapshot compiled from results of seven major retailers.

But analysts said the last-minute boost is not likely to save retailers' profits because of deep discounting by department stores and specialty chains.

Merrill Lynch retail analyst Dan Barry said heavy promotions at department stores are likely to drive earnings slightly below current estimates.

"We believe that shoppers rushed out to the stores to take advantage of deep discounts, particularly at the department stores," he said.

U.S. retail sales at discount, chain and department stores fell sharply in the first four weeks of December, but improved modestly during the week of Christmas, according to the Redbook Sales Average report released Wednesday.

Sales fell 3.9 percent in the four weeks ended Saturday from the previous month. Year-over-year sales in the latest week rose 1.5 percent.

The Redbook Average is released weekly by Instinet Research, a division of Instinet, a Reuters-owned electronic brokerage.

According to the U.S. Commerce Department, the worst holiday season for retailers in recent years was in 1990, when sales were flat.

As anticipated, the nation's top discount stores like Wal-Mart Stores Inc. and Target Corp., as well as top consumer electronics retailers like Best Buy Co. Inc. and Circuit City Stores Inc., dominated the latest holiday sales period.

Earlier this week, Bentonville, Arkansas-based Wal-Mart, the world's largest retailer, estimated that December sales at stores open at least one year increased at the high end of a 4 percent to 6 percent range.

Target said sales are on plan for a mid single-digit percentage decline in same-store sales at its Target discount stores, and it sees sales flat to down slightly at its Mervyn's mid-priced department stores and down in the low teens at its Marshall Field's upscale department stores.

But Kmart Corp. failed to benefit from the discount trend. Wal-Mart's No. 2 U.S. rival said last week that same-store sales came in at the low end of its growth target of zero to 2 percent for the week ended Dec. 26.

On Wednesday, Prudential Securities retail analyst Wayne Hood lowered its investment rating on Kmart to a rare "sell" rating from "hold," citing disappointing fourth-quarter results as well as cash flow concerns.

Hood also cut his earnings-per-share expectations for the fourth quarter ending in January and for the next fiscal year. If his estimates prove accurate, he said, Kmart's cash flow could suffer, jeopardizing a plan to fund conversions of the company's supercenters, which sell groceries as well as general merchandise.

"We don't believe a Chapter 11 filing is imminent," Hood said, "but we wouldn't rule it out if the first half of 2002 is disappointing."

In morning New York Stock Exchange trade, Kmart shares fell to $4.72, their lowest level in at least 20 years. At midday, the stock was down 72 cents, or 13.2 percent, at $4.74, down from a 52-week high of $13.50.