NEW YORK — Retailers suffered through the weakest October in at least 39 years, despite frenzied price- cutting as they desperately try to pull in consumers who are too worried about their finances to shop.
The sales tallies from major retailers Thursday — many showing declines of 10 percent or more — suggest that shoppers will remain skittish through the holiday season, buying presents for children but not much else.
“There was every reason for consumers not to shop,” said Walter Loeb, a New York-based retail consultant. “Layoffs are rising; the stock market is tumbling. Consumers are feeling poorer.”
One bright spot was Wal-Mart, whose results show how much frugal consumers are focusing on necessities.
The world’s largest retailer said it will cut prices on items from toys to laptops over the next seven weeks. Department store J.C. Penney is offering extended hours and markdowns of up to 60 percent this weekend.
The stunning and rare drop in sales last month, following an already weak September, showed the toll the financial crisis is taking on all shoppers, from teens to the affluent. Analysts expect no recovery until at least the second half of 2009.
Not even receding gas prices are expected to provide much relief for the holidays as consumers fixate on shriveling retirement funds and job security amid widespread layoffs. The number of people continuing to receive jobless benefits reached its highest level in more than 25 years, according to government figures released Thursday.
All of that is fueling more concern about the retail industry, which is expected to report its sixth consecutive quarter of profit declines when it reports third-quarter results this month. A growing number of merchants are facing a do-or-die holiday season, having already seen competitors including Mervyns and Linens ‘N Things forced to liquidate.
Loeb predicts that total retail sales for the November-December period could drop 1 percent, compared with his original growth estimate of 0.5 percent — the worst performance since at least the 1970s.
“We expect the recent challenging sales environment to continue into the holiday season and beyond as a result of the economic factors currently affecting consumer spending,” Target president and chief executive Gregg Steinhafel said in a statement.
Grim month
How October turned out for the nation’s retailers and what it means for profits and the holiday season:
Same-store sales: Down 0.9 percent in October, the weakest since at least 1969 and well below the 1.8 percent average gain in the past fiscal year. Excluding Wal-Mart, the decline was 4.6 percent.
Discounting: Salvatore Ferragamo boutiques will begin holiday sales Dec. 4, marking down men’s and women’s clothing and accessories by 35 percent to 50 percent. J.C. Penney is offering extended hours, markdowns of up to 60 percent and free shipping this weekend.
Profits: Researcher RetailMetrics expects third-quarter earnings to fall 13.6 percent, compared with the 7.7 percent decline it forecast Oct. 1. For the fourth quarter, it estimates at least a 3.7 percent drop in profits.
What’s to come: Analysts are reducing their already subdued forecasts, with a spending recovery not likely until at least the second half of 2009.
The Associated Press
