Weak Christmas sales may lead to more business bankruptcy - KWWL - Eastern Iowa Breaking News, Weather, Closings

Weak Christmas sales may lead to more business bankruptcy


Just three days left in one of the weakest Christmas seasons on record and consumers and retailers are tapped out. Now, it is not just a matter of sales, it's a matter of survival.

Deep discount signs may soon be replaced by another sign of the times.

Fred Crawford, CEO of Alixpartners said, "A lot of retailers that were bracing for a difficult holiday season have now had a terrible one."

While the final figures haven't been tallied, analysts say already low sales expectations may not be low enough.

Convincing reluctant consumers to buy has been an expensive and risky venture for stores.

"Many retailers cant afford these levels of 60-70 percent off to continue," said Retail Analyst Dana Telsey.

Now retailers are in a mad dash for cash to simply pay their bills.

But here's the problem: So are consumers. Return rates are on the rise. Retailers will have to swallow an estimated $46 billion worth of returned holiday gifts.

"In this economy if it is something they don't need or don't want I think they will return it," said Crawford.

Yet another drain on holiday profits, an exclamation point on what has been a dismal year for sales. 

"Because consumers are batting down the hatches, we are going to see a lot of retailers go out of business," said Mark Zandi from moodyseconomy.com

Some of the nation's biggest stores have already declared bankruptcy while more are on the brink. As many as 26% of retailers are in danger of going bankrupt in the next two years.

With no immediate turnaround in consumer spending in sight, retailers are doing everything they can to stay afloat.

"Live to fight another day. That is the nature of recessions," said Crawford.

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