Retailers turning up the discounts

NEW YORK - With just a few days left before Christmas, the nation's retailers are trying to attract last-minute shoppers to salvage what has been a mediocre December.

Macy's Inc. has slashed prices on a wide range of goods, such as clothing and jewelry, for example, and Toys R Us is offering price cuts of up to 75 percent this weekend. At stake are retailers' profits for the year.

While consumers jammed stores at the start of the season for big discounts, and shopped early for Nintendo Co.'s hard-to-find Wii game console; popular video games, such as Guitar Hero III: Legends of Rock; and Australian sheepskin UGG boots, they have apparently waited until the end for most everything else to take advantage of the best deals amid a challenging national economy.

The biggest disappointment comes from women's apparel, extending a downturn that has grown deeper in recent months. Women do the primary shopping for the family, so analysts say it's troubling that they are spending less time in the stores.

"I have no money or time to shop," said Tina Morabito, who just started her holiday shopping yesterday at the Providence Place Mall in Providence, R.I. She was buying greeting cards and mint chocolates but didn't plan to buy clothing.

"There's been a malaise" among women's clothing sales, and "it has spread to other areas," said Dan Hess, chief executive officer of Merchant Forecast, a New York research firm. "The panic button has been pushed, particularly in department stores."

Even with an expected sales surge this weekend, which traditionally accounts for about 10 percent of holiday sales, Lazard Capital Markets analyst Todd Slater said he expects that the last-minute spending will be "too little, too late" to save Christmas.

"When people think they are in a recession, they spend like they are in a recession," Slater said.

A series of snowstorms hampered spending in recent days, but, clearly, economic worries - particularly higher gasoline prices, an escalating credit crisis, and a slumping housing market - have weighed on shoppers' minds.

According to ShopperTrak RCT Corp., a research company that tracks sales at more than 50,000 retail outlets, business for the week ended last Saturday slipped 0.4 percent from the same week in 2006. Total traffic - the number of customers - for the same period slumped 8.9 percent from a year ago.

The apparel market was hit even harder because there was nothing new that wowed shoppers. The new style, cropped jackets with bell sleeves, failed to generate a lot of buzz, research analyst Jennifer Black said.

Hess, the Merchant Forecast CEO, estimated that discounts at department stores are about 10 percent to 15 percent higher than a year ago, a worrisome sign for profits.

Slater noted that even gift-card sales have been disappointing; in some cases, the card business may be "even down," based on spot checks with retailers.

The toy industry is expected to match last year's sales, at best. In addition to a challenging economy, the industry was hurt by a slew of recalls of Chinese-made products that made some shoppers cautious.

But online retailers are having a strong finish. According to comScore Inc., consumers spent almost $25 billion online from Nov. 1 through Dec. 18, a 19 percent increase. Even so, that's a bit below its 20 percent forecast.