Shopping days wrap up with discounts

Retailers reel back prices to make the last-minute deals

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NEW YORK -- When it comes to fat holiday discounts, better late than never.

This holiday shopping season, many stores haven't been offering the same blockbuster deals as they did last year. Instead, they've dangled offers of free shipping and no-fee layaways to lure shoppers.

But during the final weekend before Christmas, shoppers should expect to see more "70 percent off" and "buy one, get one free" signs as stores try to salvage a season that so far has been disappointing.

Teen retailer Aeropostale Inc. has slashed prices on everything in its stores by 60 percent. Rival teen chain American Eagle Outfitters is offering 40 percent off all purchases. Saks Fifth Avenue is cutting prices on some designer clothing up to 60 percent. And Children's Place, a children's clothing chain, is offering up to 75 percent off on its website.

The price slashing may be good news for shoppers, but it hurts stores. Their profits likely will suffer in their last-ditch effort to boost sales during the two-month holiday shopping period, a time when they can make up to 40 percent of their annual revenue.

To be sure, stores have been offering discounts throughout the season, but they resisted the blockbuster deals that ate away at profits last year. But sales have been slow, and as of Monday, the level of discounting is now even with a year ago.

ShopperTrak, which counts foot traffic and its own proprietary sales numbers from 40,000 retail outlets across the country, said Wednesday that the number of shoppers in stores for the week that ended Saturday fell 4.4 percent from the year-ago period, while sales declined 4.3 percent. As a result, the company said it would slash its sales forecast to a 2.5 percent increase to $257.7 billion, down from the 3.3 percent growth it had initially predicted.

Online sales are up 13 percent, to $35 billion from Nov. 1 through Dec. 16, according to comScore, an online research, below the forecast of 17 percent.

"It feels like the steam is out of the holiday since Black Friday," said Bill Martin, ShopperTrak's co-founder.

Indeed, many shoppers have been weighed down by concerns about their financial future. Some worry about the weak U.S. job market, while others fear the possibility that a stalemate between Congress and the White House over the U.S. budget could trigger tax increases and spending cuts known as the "fiscal cliff" next year. That would mean less money in shoppers' pockets.

Wal-Mart CEO Mike Duke said during a speech in New York City last week that a recent poll of shoppers of the world's largest retailer found an overwhelming majority are aware of the threat of higher taxes, which is leading some to cut back on holiday buying.

And consumer confidence fell sharply this month, according to a survey by the University of Michigan, partly because of concerns that taxes will rise next year if no deal is reached.

Big weekend

Still, time is on stores' side. Six of the top 10 spending days for the holiday season are still ahead, including today, the Saturday before Christmas, which is expected to be the second-biggest shopping day of the year. And last year, the final 10 days before Christmas generated nearly 24 percent of the holiday sales, according to MasterCard Advisors' SpendingPulse, which tracks spending across all payments including cash.

At Takara, a clothing and jewelry store in Oak Park, Ill., owner Takara Gudell said holiday sales were up about 3 percent this year compared to a year ago, but said brisk business is just getting started for the season.

But Gudell said she's counting on the final days to be the "big rush."

"Christmas will still come," she said.