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Quick Hits: Retailers' Final Sale?


Brief scrutiny of today's headlines.

Many retail chains are expected to report a significant drop in September sales at stores open at least a year, a key measure of retail performance.

Steep discounts haven't helped. This suggests a weak Christmas season, perhaps the worst for retailers since 1991, the Wall Street Journal reports.

Discounters may be the lone bright spot when retailers report September sales this week. Analysts expect Wal-Mart (WMT) to post a gain of 2.8% while discount membership stores Costco (COST) and BJ's Wholesale Club (BJ) are also expected to show higher year-over-year sales.

But analysts expect sales at department stores to fall an average of 6.1%. The estimate doesn't include Macy's (M), because the chain stopped reporting monthly sales.

Apparently, prospective buyers are no longer enticed by claims of "final sale" or "last chance." Spending on apparel and other discretionary items appears to have dropped more in September than it did during the summer, MasterCard Spending Pulse reports. Consumer spending represents about 70% of the nation's Gross Domestic Product.

Ann Taylor (ANN) offered discounts up to 60%. Gap (GPS) and its Banana Republic stores advertised discounts up to 40%. Wal-Mart said last week it had cut prices $10 on 10 popular Christmas toys. Restoration Hardware offered $100 off purchases of $400 or more. Target (TGT) is again stressing value.

Retail prices may have to go even lower to get consumers to spend. Meanwhile, the cost of non-discretionary items such as food and gasoline has increased, and consumers have cut back on discretionary purchases of furniture, apparel and home electronics.
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