NEW YORK — In a bid to pull hesitant shoppers into their stores, retailers are slashing prices on everything from jeans to dinnerware. But those fat discounts likely will come at a big cost for the companies.
At teen retailer American Eagle Outfitters, shoppers who buy jeans get a second pair at half off. Jewelry chain Zale is offering an extra 20 percent off on a slew of items such as gold earrings that were already slashed up to 70 percent. And Pottery Barn has discounts of up to 75 percent.
“There’s a fine line between aggressive promotions and panic, and we are seeing a little bit of both right now,” said Dan Hess, founder and chief executive of research company Merchant Forecast.
While retailers entered the fall season with inventories well below last year, analysts say many were still a little too hopeful.
August sales are turning out to be even weaker than expected, which analysts fear could lead to more piles of marked-down merchandise on the floor. That could in turn hurt third-quarter profits as the industry prepares for the critical holiday season.
Major retailers, including Wal-Mart, J.C. Penney and Gap, which also operates Banana Republic and Old Navy stores, are slated to announce final August sales results Thursday.
