Beleaguered retailers announced plans to close stores, promised more bargain-basement prices and cut their earnings forecasts Thursday, signaling deals for shoppers but more trouble ahead for the country's deteriorating economy.
Macy's Inc., one of the nation's largest department store chains, said it would shutter 11 stores across the country, including one of its two neighboring locations in downtown Los Angeles. Nordstrom Inc. said it was trimming inventory levels at its stores to meet weak demand. Even discount giant Wal-Mart Stores Inc., considered one of the few retail winners, lowered its earnings projections.
The news came as major chain stores confirmed that 2008 was the worst holiday season in decades.
With no prospect for a quick turnaround in sight, retailers are bracing themselves for an industry shake-up that will eliminate the weakest players, analysts said. That would leave store employees without jobs, commercial landlords scrambling for new tenants and consumers with fewer choices.
"There's more to come, clearly," said Todd Slater, an analyst with Lazard Capital Markets. "Retailers are struggling, are feeling the pain that has widely hit most other sectors. The retail sector will feel it most acutely. Nobody is immune."
Desperate merchants were counting on a robust holiday season to pull them out of a months-long slump. The end of the year is a crucial time for the industry -- sales from November and December usually make up 25% to 40% of annual revenue.
But sales fell 2.2% during the two-month period compared with a year earlier, according to the International Council of Shopping Centers. That made it the weakest holiday season in 40 years, despite some of the most aggressive markdowns ever seen on merchandise including electronics, apparel and luxury items.
"Retailers were forced to slash prices to entice consumers to spend," said Michael Niemira, the council's chief economist, who said he worried the holiday season was losing some of its clout. "But even that strategy was not enough."
About 73,000 stores may close in the first half of this year, according to the shopping center group.
Macy's, which reported a 4% same-store sales decline, said 960 employees would be affected by its 11 store closures.
The only California location scheduled to close is in the 7+Fig shopping center at 920 W. 7th St. in downtown Los Angeles. The store opened in 1986 and employs 136 workers, the company said. Clearance sales will begin within the next week.
