NEW YORK – With Christmas only a few days away, retailers struggling with disappointing sales slashed prices further, but failed to loosen American shoppers' purse strings.
The Washington, D.C.-based National Retail Federation on Monday predicted total holiday retail sales, which excludes restaurant and auto sales, will rise in the range of 2.5 percent to 3 percent, to roughly $206 billion.
That would make it the worst holiday-season retail performance since 1990, when sales were basically unchanged. The Thanksgiving shopping weekend, while solid, failed to give merchants the relief they were hoping for, and sales have been limping along since then.
Federated Department Stores Inc., parent of the Macy's and Bloomingdale's chains, reported in its recorded weekly sales update that sales at its stores in the third week following Thanksgiving were weak.
Analysts and economists said Federated's comment pointed to continued reluctance by shoppers to commit themselves to a shopping spree on items they deem nonessential despite the fact that Christmas was getting closer.
"I don't expect that there will be a late holiday surge in spending by consumers in the light of the continuing fallout in unemployment," Frank Badillo, senior retail economist at Retail Forward, said.
"I think shoppers are going to remain cautious and sales are going to remain weak," Badillo added.
Discounter Wal-Mart Stores Inc. said while merchandise like Christmas trees and lights sold well in the Dec. 8-14 week, its comparable store sales at its discount stores had also trended "slightly below plan."
"[Stores] are desperately trying to move out merchandise, but they are not doing so successfully," Kurt Barnard, president of Barnard's Retail Trend Report, said Sunday. "This is the home stretch, and they are whipping the horse, but the horse is responding only sluggishly."
Worries over the faltering U.S. economy and the threat of layoffs continue to weigh on consumer sentiment.
"I am spending less, just buying toys for my friends' children," said Judy Boudreau, from Jupiter, Fla., shopping at Macy's in New York. "I have to be more conservative, given what has happened to my investment portfolio."
Sales at Bloomingdale's were running above expectations this weekend, according to chairman Michael Gould. But at K-B Toys, which operates 1,400 stores, the weekend's sales were up only in the low single digits from a year ago. Spokesman John Reilly said sales of game consoles and game software were strong, but toys sales were unchanged from a year ago.
Struggling Gap Inc. took even more aggressive markdowns to move out its merchandise, ranging from crocheted scarves that had retailed for $28 and were now $9.99, to lambswool and angora-blended sweaters that had dropped from $78 to $39.99.
At Saks Fifth Avenue's New York flagship there were racks of designer merchandise discounted by as much as 40 percent.
At Macy's New York store, consumers swarmed over piles of discounted handbags and sweaters. For some items that were marked down twice, consumers were able to shave 90 percent off the original price - a great deal for a shopper, but disastrous for a store's receipts.
"You're really getting more for your money," said Laura Manning, from Medford, N.Y. "I got sweaters that were 60 percent off for my sons in stores on Long Island. They're giving it away."
Reuters and the Associated Press contributed to this report.