Shoppers eye bargains before Christmas

By Heather Burke  |   2008-12-22  |     NEWSPAPER EDITION

CASH-STRAPPED shoppers are searching for bargains in the final days before Christmas and some are limiting their gift-giving to children in what could be a make-or-break weekend for United States retailers.

Consumers who waited until now for deeper discounts probably will be rewarded as retailers seek to clear inventory and salvage what may be the worst holiday season in 40 years, even though their fourth-quarter profits may suffer as a result.

Macy's Inc, the second-largest US department-store chain, offered US$800 sapphire or ruby and diamond rings for US$249 on Saturday. Gap Inc's Banana Republic chain advertised clothing for as much as 60 percent off. A US$2,100 Marc Jacobs dress was listed at US$629.95 on Saks Inc's Website. Toys 'R' Us Inc cut prices on Elmo dolls.

''We're buying less stuff for each other and just overall,'' Dennis Decker, a 47-year-old landscape architect, said on Saturday outside a Kohl's in Douglasville, Georgia. ''Usually I buy stuff for my sisters. This year I'm just going to make them some Christmas ornaments.'' The Standard & Poor's 500 Retailing Index has shed 31 percent this year, with only two of its 27 companies gaining. The index doesn't include Wal-Mart Stores Inc, the world's largest retailer, which rose 33 cents to US$55.74 on Friday in New York Stock Exchange composite trading. The stock has gained 17 percent this year.

Toys 'R' Us is cutting the price of Mattel Inc's Elmo Live furry red Muppet through Wednesday, Christmas Eve, by US$10 to US$49.99 and reducing Jakks Pacific Inc's EyeClops Night Vision Infrared Stealth Goggles by US$20 to US$59.99.

''I do believe this is going to be one of the largest weekends in retail history,'' Toys "R" Us Chief Executive Officer Gerald Storch said in a Bloomberg News interview on Friday. ''There's a lot of pent-up demand, and there's going to be fantastic deals.''

Shoppers grappling with shrinking housing prices and rising unemployment have cut back on non-necessities, pushing the US economy into a recession. Consumer spending accounts for more than two-thirds of gross domestic product, and 81 percent of consumers plan to spend less this holiday season, according to a study by NPD Group Inc released on Friday.

Credit squeeze

At least a dozen retail chains, including Circuit City Stores Inc, have sought bankruptcy protection this year. A credit squeeze may result in thousands of locations being closed in 2009, Gregory Segall, a managing partner at buyout firm Versa Capital Management Inc, said last week.

''This year, you have many retailers just trying to clear inventory to raise cash rather than to achieve highest profit,'' said Linda Tsai, a retail analyst at MKM Partners LLC.

For the last few years, Black Friday, the day after Thanksgiving and the unofficial start to the holiday-shopping season, has been the biggest shopping day in sales, said Ellen Davis, a National Retail Federation spokeswoman. This year, with people waiting until the last minute to buy, today (Friday) was ''incredibly important,'' she said.

Average Americans have finished almost two-thirds of their holiday shopping, a survey, done on Tuesday to Thursday by BIGresearch and released on Friday, showed.