October retail sales “fell off a cliff,” according to The New York Times, “casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades.”
Sales at Neiman Marcus dropped nearly 28 percent in October. Sales fell 20 percent at Abercrombie & Fitch, nearly 17 percent at Saks, 16 percent at Gap and nearly that much at Nordstrom.
Of the more than two dozen major retailers that reported on Thursday, most had same-store sales declines, the majority of the decreases in double digits. Only deep discounters like Wal-Mart and BJ’s Wholesale Club reported gains.
The Times said consumers are cutting their spending for many reasons, but high on the list is the weakening employment picture. Even people who still have jobs are pinching pennies as they hear of layoffs among friends and family. Unemployment has hit 6.1 percent, and a new jobs report due Friday is expected to show further deterioration.
Seven weeks before Christmas, many stores are offering bargains in order to move merchandise. Kohl’s will stay open until midnight this Friday and offer an array of doorbusters, such as $250 diamond earrings for $77.99. Kmart is offering “early Black Friday” deals on Sundays, such as a Sylvania 32-inch LCD television for $439.99, instead of the usual $549.99. Even Walmart, whose October comps were up 2.4 percent, began a big discount program this week, lowering prices on thousands of food and gift items. It is cutting the price of a Magnavox Blu-ray player to $198 from $229, and of the Battleship board game to $10 from $14.38.
Retailers that include American Eagle, Ann Taylor, Chico’s, Soma, Gap, Victoria’s Secret, Bath & Body Works, Talbots and J. Jill have offered discounts on their entire merchandise lines or are letting shoppers buy one item and take 50 percent off a second.
Burt Tanksy, Neiman Marcus chairman and ceo, told The Daily News Record, “We anticipated the fall to be very challenging, but certainly the [October] results were weaker than anticipated. We didn’t anticipate that kind of drop.”
He said it was far too early to get a read on November business, which includes the heavily promotional Thanksgiving weekend, though the holiday for Neiman’s, relative to department stores, is not as much of a volume driver. He added that he thought it was a positive for business that the presidential election is past, removing one uncertainty from the consumer’s psyche.
The luxury retailer has reduced fiscal 2009 capital expenditures to a range of $100 million to $110 million from the previous $135 million to $145 million. The reduction would affect remodelings and information technology initiatives, but no store openings at this point.