Last-minute shoppers headed to the nation's stores and malls on the day before Christmas, looking for the final items they needed and searching for good deals — but for retailers, the season was essentially over long ago.

Many merchants are already tallying up just how dismal their sales were in a season expected to be the worst in decades.

"It's beyond the worst fears of retailers," said C. Britt Beemer, chairman of America's Research Group.

A lot is at stake. The holiday shopping season accounts for as much as 40 percent of annual profits for many retailers, and the earnings outlook is growing more dire every week.

Retailers' woes were good news for the dwindling numbers of shoppers who could afford to load up on deals. With mounds of inventory still left to sell, merchants are expected to deepen the discounts even more the day after Christmas.

But if 75 percent off before Dec. 25 didn't make shoppers splurge, will even bigger deals do the trick amid mounting worries about layoffs and shrinking retirement funds?

Crowds were light early Wednesday at the Square One Mall in Saugus, Mass., a suburb north of Boston. Wander Caldas, a 50-year-old truck driver from Everett, Mass., said his wife had lost her job and wasn't working this year, so the family — including his 12-year-old son — had cut their Christmas spending.

"We cut it like in half," Caldas said. "That's why I have to slow down."

Caldas said his son wanted an iPhone and Sony PlayStation 3, but "it's not a good time. He'll have to wait."

Barbara Rice came to Mondawmin Mall in Baltimore for some last-minute gifts and knew she'd find deals, saying she regularly saw "half off, 75 percent off."

"I'm almost done," she said. "It's just the little leftover stuff I have to do today."

Her daughter, Donyai Rice, wasn't planning on shopping when she got to the mall. However, she found a $60 Sony PlayStation2 video game system, a Nintendo Game Boy, a cell phone and shoes all on sale.

In Christmases past, the retail industry had relied on a surge before and after Christmas to help save the season. But the holiday period was virtually over before the Thanksgiving weekend ended as stores grapple with the most severe retrenchment in consumer spending in decades.

Facing pressure from vendors and consumers who aren't spending, Circuit City Stores Inc. filed for bankruptcy protection last month. It plans to keep operating, but toy retailer KB Toys, which filed for bankruptcy protection earlier this month, has already begun to liquidate all of its stores and will shutter operations completely.

Merchants desperate to pull in shoppers started deeply discounting holiday goods as soon as they hit stores starting in November. But except for a shopping binge on the day after Thanksgiving, Americans have remained tight-fisted. When they do buy, they are looking for small-ticket, more practical gifts.

Dana Ringhand, a 40-year-old elementary school teacher from Windsor, Wis., picked up last-minute holiday items Wednesday. She bought two towels at Boston Store at half off, estimating that she paid about $12 each. She said she started Christmas shopping after Thanksgiving and has been using a Christmas savings account that has helped her stay on budget.

Analysts have kept slashing their holiday estimates. Michael P. Niemira, chief economist at the International Council of Shopping Centers, now expects that sales at established stores for November and December will fall 1.5 percent to 2 percent — making it the weakest holiday season since at least 1969, when the index began.

Excluding Wal-Mart Stores Inc., one of the few bright spots in retailing, same-store sales could be down as much as 7 percent for the holiday period. Same-store sales are sales at stores opened at least a year and are considered a key indicator of a retailer's health.

Stores are expected to post an 18.8 percent decline in fourth-quarter profits, marking the seventh consecutive period of profit declines, according to Ken Perkins, president of research company RetailMetrics LLC. He expects profits to keep tumbling into the first quarter, with predictions so far of a 10.4 percent drop.

Merchants can't even count on gift card sales, which have been well below last year, to boost profits and sales. In the past, gift cards had lifted post-Christmas season as shoppers went back to the stores to redeem the plastic on discounted and regular-priced merchandise. That's because shoppers find they get better value by buying discounted merchandise. Consumers are also fearful of buying gift cards from retailers that may go bankrupt.

Karen MacDonald, a spokeswoman at Taubman Centers Inc., which operates 24 malls in 11 states, said that gift card sales have been tracking anywhere from single-digit declines to double-digit declines this season, a worrisome sign.

Gift cards "certainly drive business the week after Christmas," she said. "I think there were so many good deals out there that many people made that their gift of choice."

Maureen Kapnis, a restaurant owner in Salem, Mass. who was shopping Wednesday for some final small gifts for her family and friends at the Square One Mall, said that worries about store bankruptcies stopped her from buying many gift cards. She bought only a mall gift card.

"I did not do businesses," Kapnis said. "I was scared they were going to go under. In general, I played it safe. I went with the mall card."