Retail Holiday Hell

Did someone cancel Christmas? It sure feels that way.

The panic is palpable: Stores festooned with holiday decorations since October; preseason Black Friday-level markdowns getting deeper every week; high-end retailers using lowbrow promotion tactics.

In normal times, the holiday season is make-or-break time -- with some retailers picking up 40% or more of their sales in the final weeks. This year, it's do or die. Literally.

Heading into Bleak Friday
Even before kids were halfway through their Halloween candy, the nation's second-largest electronics retailer, Circuit City, filed for Chapter 11. 

Circuit City's just a preview of what will likely become the most disastrous holiday season on the books -- one that we'll likely look back on as the beginning of the end for some of the retail sector's stalwart players. Unprecedented signs of desperation are on display everywhere:

  • High-end operators like Saks (NYSE: SKS  ) and Nordstrom are rolling out their preferred-customer "private sales" to the masses -- and extending these promotional events, or even repeating them weeks later.
  • Sears Holdings' (Nasdaq: SHLD  ) Sears stores have already announced a list of 450 doorbuster specials for their Black Friday extravaganza.
  • Taking doorbuster deals to a new level, eBay (Nasdaq: EBAY  ) is positing limited quantities of two items and one surprise luxury item daily from Nov. 24 till Dec. 8 for a fixed price of just $1 – and free shipping to boot.
  • The return of '80's-era layaway plans at places like Kmart and T.J. Companies' (NYSE: TJX  ) T.J. Maxx and Marshall's stores.
  • Hourly roadside sign-wavers trading in their bankruptcy liquidation placards for ones touting deals at Lord & Taylor.
  • And heretofore too-cool-to-stoop-to-the-holiday-hype brands like Apple (Nasdaq: AAPL  ) and Tiffany (NYSE: TIF  ) -- yes, Apple and Tiffany -- resorting to promotions to boost business.

As we head into Black Friday -- one of the biggest retail sales days of the year -- consumers have yet to take the bait. Suffice it to say, the outlook is far from festive.

Retail code red
To recap (in case you're still clinging to some of the holiday spirit), we've got an abysmal economy, surging unemployment, a market operating at Code Red status daily, and an ever-tightening tourniquet on consumer credit. Add to that a holiday season with five fewer shopping days between Thanksgiving and Christmas, and you get Holidaze '08.

We've taken an in-depth look at the state of retail going into the holiday season, identifying the companies that we think have a winning recession formula -- and the ones that may not survive through the holiday season of 2009. Read on for:

We've also scoured the mall, shopped online, and perused stand-alone stores to pick the standout stocks -- and the stinkers -- in key areas of retail: Inventory management, online prowess, customer service, serving a niche market and the ability to change with the times. Our coverage -- which includes plenty of timely investment ideas -- follows:

Every bargain hunter knows that the best deals are had are in the offseason. (Many a perfect winter coat has been bought during the dog days of summertime.) This is the mother of all offseasons, for sure. We'll be scouring the circulars, the shops, and the sales data this entire season and beyond to help investors bag bargain retail stocks for the long haul.

Apple and eBay are Stock Advisor selections. Sears Holdings is an Inside Value recommendation. Either service is free for 30 days.

Shopping is Dayana Yochim's cardio. She owns none of the companies mentioned in this article, though has broken a sweat and thrown a few elbows to get to the really good clearance sales at some of them. The Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (38)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 24, 2008, at 4:42 PM, todd670 wrote:

    Maybe the surviving retailers can learn to structure their businesses so that every year the holdiday season isn't a "make or break" event.

    I'm tired of reading about this every year and it makes me wonder how sound these retail businesses are.

    I for one wouldn't mind a reduction in all the "buy buy buy" crap I hear this time each year.

  • Report this Comment On November 24, 2008, at 5:59 PM, FinancialFellow wrote:

    It's a shame that Border's may be one of the retailers that bites the dust this year. I feel as though I may have had a small part to do with that: http://financialfellow.com/2008/11/16/the-borders-public-lib...

  • Report this Comment On November 24, 2008, at 8:33 PM, titanicdwn wrote:

    Excuse me. I already outlined pretty much this same scenario on previous comments. Hate to say I told ya so. There is far worse to come.

  • Report this Comment On November 25, 2008, at 4:38 PM, PaintItBlue wrote:

    I already hit the mall, and all the coats were ugly. They blew it.

  • Report this Comment On November 28, 2008, at 4:35 PM, noretirementyet wrote:

    Went driving around this morning, sadly the stores were not busy, even at 8am! Target looked just the same as a regular shopping day. Suprisingly Circuit City, which is based in my city, had a full parking lot!

    No one got my hard earned $$$ today...I am holding out, and holding on for now!

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