A flurry of post-Christmas shopping won’t be enough to save retailers’ profits for the crucial fourth quarter.
Major chains today are expected to collectively post a 1.2 percent decline in December same-store sales, or sales at stores open at least a year.
That will cap the first outright drop in holiday sales in several decades of record keeping.
Adding to retailers’ pain, analysts say holiday sales were driven mostly by heavy discounts, as wallet-conscious shoppers combed racks and shelves for bargains.
“The only good thing to say about December is that it’s over,” said Brian Tunick, an analyst at JP Morgan Securities.
Wall Street analysts expect Macy’s to post a 4 percent drop in its same-store sales – or sales at stores open at least a year. But some insiders say the results could be worse.
Meanwhile, declines at rival chains are expected to be even steeper, with Saks, Nordstrom, J.C. Penney and Kohl’s all seen down in the double digits.
That’s on top of heavy markdowns – frequently between 50 and 70 percent – that are expected to spur a slew of profit warnings.
A rare bright spot among the carnage will be Wal-Mart, which is expected to post a 2.5 percent gain, as shoppers scoured its aisles for bargains on essentials.
But far more typical will be declines. Abercrombie & Fitch is expected to post one of the steepest drops – more than 20 percent, according to analysts.
Having resisted holiday discounts, Abercrombie has recently begun to mark down its pricey jeans and sweatshirts.
Still, even chains with splashy promotions – most notably department stores – failed to generate big sales.
As retailers take steep markdowns to clear unwanted holiday goods, many are pressuring their suppliers more than ever to cough up cash to pay for losses taken on clearance sales.
The problem, insiders say, is that such hardball tactics – typical at the close of every holiday season – may be too much to bear for some vendors, most of whom are small outfits with less access to capital than the retailers.
According to data released by SpendingPulse yesterday, clothing stores saw a sales drop of 17 percent in December. Compared to last year, electronics and appliance sales dropped 21 percent, the data showed.
Luxury sales fared even worse, with sales plunging 28 percent, according to SpendingPulse, which tracks sales based on estimates from credit card sales data.