Retailers slash prices in attempt to salvage shopping season
NEW YORK -- The nation's retailers slashed prices further Wednesday in hopes a post-Christmas shopping rush will salvage holiday sales that, so far, have fallen below even modest expectations. In particular, they are waiting for legions of shoppers armed with gift cards to snap up bargains and buy fresh new merchandise that just hit store shelves.
Merchants in past years have received a late bounce during big clearance markdowns, and they find themselves again in the position of hoping bargain-hunting consumers will come through in the end. Gift card sales are not recorded until shoppers redeem them.
Investors, however, grew pessimistic about this holiday season as well as the financial well being of consumers in a challenging economic environment. Shares of most retailers fell Wednesday, led by Macy's Inc. which sank as much as 5 percent in afternoon trading.
"Shoppers are thinking twice about what they are buying," said Jennifer Black, president of Jennifer Black & Associates, an equity research company in Lake Oswego, Ore. "There's a feeling of worry."
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Black, along with other analysts, made the rounds at malls in Oregon and New Jersey, noting that even with gift cards, shoppers remained tightfisted Wednesday, focusing on bargains despite fresh offerings from merchants.
"My son gave me gift cards for clothes, and I get up with the birds, so I figured I'd get the most with my money," said Susan Depetris, who was loading discounted pants and sweaters into a cart at Kohl's in Medford, Mass. She didn't plan on looking for gifts for anyone else. She had just one person on her mind while she shopped -- herself.
The International Council of Shopping Centers said Wednesday same-store sales, or sales at stores opened at least a year during the November-December period, are coming in just below already slim projections for a 2.5 percent gain, though it said a post-Christmas buying splurge could erase that shortfall.
Target Corp. warned late Monday its same-store sales might decline for December. Meanwhile a broad gauge of consumer spending released by Mastercard Advisors -- a division of the credit card company -- that includes estimates for spending by check and cash, reported on Tuesday an increase of 3.6 percent from Nov. 23 to Dec. 24, the low end of expectations. That compared with a 6.6 percent gain in the year-ago period. Excluding gas purchases, holiday sales were up only 2.4 percent.
"The ingredients were not there for a blockbuster season," said Michael McNamara, vice president, research and analysis of MasterCard Advisors. "And retailers in many respects got the most out of the season that they could, based on the environment."
Higher gasoline prices, an escalating credit crisis and a housing slump made shoppers cautious, which has manifested itself in weakening sales growth throughout the year, McNamara said. Shoppers jammed stores at the start of the season but held out for deals through most of December only to return for a last-minute spending spree when the bargains were even better.