NEW YORK - The nation's retailers yesterday slashed prices further in hopes that 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 that 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 yesterday.

"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."

Black and other analysts made the rounds at malls in Oregon and New Jersey, noting that even with gift cards, shoppers yesterday remained tightfisted, 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 yesterday that 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 that a post-Christmas buying splurge could erase that shortfall. That contrasts to a more upbeat assessment from its chief economist, Michael P. Niemira, who predicted following the weekend's spending surge that holiday sales could at least meet forecasts.

Target Corp. warned late Monday that 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 of 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, manifested 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.

To spur business, stores early on were aggressive with discounting, raising concern over retailers' profit picture during this crucial period. The holiday season accounts for up to 30 percent of annual stores sales. For toy sellers, holiday business accounts for as much as 50 percent.

A better tally of how retailers fared won't arrive until at least Jan. 10, when major merchants report final same-store sales figures for December. Merchants are slated to report fourth-quarter profits in February.

The biggest loser is women's apparel, which has been one of the weakest performers and will see its profits hit hard, analysts said. But there are signs that the luxury business could be softening too. At Houston's upscale Galleria mall, the luxury-menswear store Bernini was empty despite large 70-percent-off signs.

"People are spending less and they're being really picky," said salesman Cleveland McMakin, who called it the worst season in his three years at Bernini.

Even $995 leather jackets marked down to $299 and $595 blazers being sold for $179 did not spark optimism.

"We've never marked stuff down this low before," McMakin said. "We're just trying to sell it."

Retailer woes can be good news for shoppers, who are being bombarded with more generous discounts in the after-Christmas period than a year ago, industry officials said. Susan Valentine, senior vice president of marketing at mall operator Macerich Co. said discounts on holiday decor are reaching 75 percent. Last year at this time, decor was reduced up to 60 percent. Meanwhile, apparel is being slashed to up to 70 percent. Last year, the price cuts were around 50 percent. *