Last-minute shoppers can't save dismal Christmas

NEW YORK -- Last-minute shoppers headed to the nation's stores and malls on the day before Christmas, looking for the final items they needed and searching for good deals — but for retailers, the season was essentially over long ago.

Many merchants are already tallying up just how dismal their sales were in a season expected to be the worst in decades.

The holiday shopping season accounts for as much as 40% of annual profits for many retailers, and the earnings outlook is growing more dire every week.

Retailers' woes were good news for the dwindling numbers of shoppers who could afford to load up on deals. With mounds of inventory still left to sell, merchants are expected to deepen the discounts even more the day after Christmas.

But if 75% off before Dec. 25 didn't make shoppers splurge, will even bigger deals do the trick amid mounting worries about layoffs and shrinking retirement funds?

In Christmases past, the retail industry had relied on a surge before and after Christmas to help save the season. But the holiday period was virtually over before the Thanksgiving weekend ended as stores grapple with the most severe retrenchment in consumer spending in decades.

Facing pressure from vendors and consumers who aren't spending, Circuit City Stores filed for bankruptcy protection last month. It plans to keep operating, but toy retailer KB Toys, which filed for bankruptcy protection earlier this month, has already begun to liquidate all of its stores and will shutter operations completely.

Merchants started deeply discounting holiday goods as soon as they hit stores starting in November. But except for a shopping binge on the day after Thanksgiving, Americans have remained tight-fisted. When they do buy, they are looking for small-ticket, more practical gifts.

Analysts have kept slashing their holiday estimates. Michael Niemira, chief economist at the International Council of Shopping Centers, now expects that sales at established stores for November and December will fall 1.5% to 2% — making it the weakest holiday season since at least 1969, when the index began.