Retail sales rose 2.5 percent last month as stores discounted items and offered online specials during what the National Retail Federation expects to be the smallest growth in holiday-season sales in five years.

Sales fell 2 percent from the week before as shoppers cut back after a Thanksgiving holiday weekend of price discounts, the International Council of Shopping Centers and UBS Securities L.L.C. said yesterday. Same-store sales for the week ended Dec. 1 gained 3.1 percent from a year earlier.

Target Corp., Dillard's Inc., and Circuit City Stores Inc. are cutting prices as much as 50 percent, and eroding profits, to lure consumers as they face higher food and gasoline prices. More people shopped over the Thanksgiving holiday weekend than a year ago, but they spent less on average per person, the National Retail Federation said.

"The retail environment's been lousy out there this year," said Jon Fisher, who helps manage $22 billion, including retailers' shares, at Fifth Third Asset Management Inc., Minneapolis.

November includes sales on Black Friday, the day after the Thanksgiving holiday, which is typically one of the busiest shopping periods. Weekly sales fell 2 percent after Black Friday for the biggest sequential drop in a year.

The last quarter accounts for 30 percent of retailers' annual profit, according to Michael Niemira, the shopping center group's chief economist. The 30-member Standard & Poor's 500 Retailing Index has fallen 5.1 percent since the holiday shopping season began Nov. 1.

The sales figures are preliminary, and the shopping center group and UBS, as well as the retailers themselves, will report November sales tomorrow.

The discounts are hurting some retailers' profits. Sales and earnings have declined at Sears Holdings Corp., sending its stock to the biggest drop in more than four years on Nov. 29.

Shares of Phillips-Van Heusen Corp., the seller of Calvin Klein and Izod clothes, fell as much as 15 percent in New York trading yesterday after release of a full-year profit forecast that trailed analysts' estimates.

This holiday shopping season's sales are expected to show the smallest growth in five years. The National Retail Federation says it expects sales to increase 4 percent in November and December from the same period a year earlier.

Online spending, which makes up more than 3 percent of all retail sales, rose 18 percent to $4.06 billion in the week through Nov. 30, ComScore Networks Inc., of Reston, Va., said Sunday. The most-visited sites were from Yahoo Inc., Target, Apple Inc., Circuit City, and Toys R Us Inc.

Online sales Nov. 26, the first Monday after Thanksgiving, rose 21 percent to a record $733 million as consumers returned to work and shopped over the Internet, ComScore said.

Internet sales may climb 20 percent to $29.5 billion in November and December, less than the 26 percent growth during the same time period last year, ComScore said.