"This has absolutely been one of the most promotional holiday seasons on record," said Kurt Barnard, president of Barnard's Retail Trend Report. "It doesn't bode well for profits."
"And now, retailers are trying to get back to regular pricing and they're finding that sales are sputtering."
While Wal-Mart Stores Inc, Family Dollar Stores Inc, Ross Stores Inc and other bargain chains benefit from penny-pinching shoppers, mainstay companies such as Gap Inc and American Eagle Outfitters Inc, have less leeway.
Gap, the largest US clothing retailer, reported its first back-to-back quarterly loss in the period that ended Feb. 2. Gap cut holiday-season prices to get rid of merchandise, including styles that put off older customers and failed to attract younger ones. Sales rose almost 10 percent at American Eagle Outfitters Inc, a casual-clothing retailer aimed at 16- to 34-year-olds. Its earnings still fell 11 percent.
Clothing prices rose 0.5 percent in February, the Labor Department reported yesterday. The increase was the first in four months, and prices were down 3.8 percent from a year earlier.
Gateway, the second-biggest direct seller of personal computers after Dell Computer Corp, said late last month it will have a wider first-quarter loss than analysts forecast. Computer prices last month were down 30 percent from February 2001.
Delta said Tuesday its first-quarter loss will be as much as US$380 million amid fare-cutting by rivals such as Southwest Airlines Co. While fares rose last month, they were down 4.1 percent over the year.
A boost in capital spending "will depend very much on our return to profitability," Chief Executive Officer Leo F. Mullin said in an interview last month. As for a resumption of spending plans that were made before the terrorist attacks Sept. 11 disrupted travel, "I think that's a good year off."
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