Bargains for few who can afford them

US retailers may struggle to boost sales this month as consumers grappling with lower home values and higher food and energy costs shun full-priced goods.

Target Corp, the second-largest US discount chain, said yesterday that it needs sales to "meaningfully improve" this month to achieve fourth-quarter profit growth.

J.C. Penney Co, the third-biggest department-store chain, expects sales at stores open at least 12 months to fall for the five weeks through to January 5, Bloomberg News reported.

Retailers may cut prices further during what the National Retail Federation in Washington forecasts will be the slowest holiday shopping season in five years. Consumers contending with defaults on mortgages and higher costs for milk and gasoline may wait until closer to Christmas to spend, hoping for discounts of 50 percent or more on sweaters and electronics.

"I don't think there's going to be anything that's going to take the focus away from price," said Christian Andreach, who helps manage more than US$15 billion at Manning & Napier Advisors Inc in Fairport, New York. "Everyone's pretty much aware of the negatives."

The NRF projects November and December sales will rise four percent, the smallest gain since 2002. That year sales added 1.3 percent.

The 30-member Standard & Poor's 500 Retailing Index is down 11 percent this year. Minneapolis-based Target declined six cents to US$55.51 in New York Stock Exchange composite trading. J.C. Penney, based in Plano, Texas, gained US$3.08 to US$47.92.

Same-store sales at Nordstrom Inc and Macy's Inc benefited last month because an early Thanksgiving this year moved extra holiday shopping days from this month. Cincinnati-based Macy's, the second-largest department store chain, said same-store sales may drop four percent to seven percent this month because of the calendar shift.

US retail sales at stores open more than a year may climb 1.5 percent this month because "what you gain in November, you lose for December," Michael Niemira, chief economist at the International Council of Shopping Centers, said yesterday. He reaffirmed the group's forecast for a combined November-December gain of 2.5 percent, which would be the slowest growth since 2004.

Shoppers spent 3.5 percent less per person over the Thanksgiving weekend than in 2006, the NRF reported.

Black Friday, the day after Thanksgiving, is considered the unofficial start to the holiday shopping season and is one of the busiest days for retailers.

Twenty-three percent of shoppers say they are spending less on Christmas gifts this year, an all-time high, according to a poll conducted on December 1 and 2 by America's Research Group. Consumer confidence dropped last month to the lowest level since the aftermath of Hurricane Katrina in 2005, according to the New York-based Conference Board.