Check out a stream of extremely sobering news from – and for – retailers.

This week, quarterly reports came in from Macy’s, Kohl’s, Nordstrom, JC Penney, Charlotte Russe, and Abercrombie & Fitch.

What did they all have in common? All reported profit drops and in the case of Macy’s and Charlotte Russe, quarterly losses.

Those dreary results followed a bankruptcy filing by Circuit City at the start of the week and then a large profit warning from competitor Best Buy.

Wal-Mart, the retailing behemoth, was able to post a nearly 10 percent rise in its quarterly earnings. But investors were somewhat taken aback when it provided a fourth-quarter earnings forecast that could possibly fall below Wall Street expectations, as it gets hit by a stronger U.S. dollar — which lowers the value of its international sales.

To cap it all off, government data showed on Friday that sales at U.S. retailers suffered a record decline in October. Sales slumped 2.8 percent last month to a seasonally adjusted $363.7 billion, the largest decline since the series began in 1992, the Commerce Department said. This compared with a revised 1.3 percent fall in September, previously reported as a 1.2 percent decrease.

It all comes just two weeks before retailers try to get consumers into their stores — and then actually spending money — during the Thanksgiving holiday shopping week. Get ready for a discount bonanza!

Also in the basket:

Wal-Mart CFO: strong dollar could lower cost of goods

Walmart.com CEO says sales grow despite downturn

Americans teetering on $14 trillion debt pile

(Photo: Reuters)

Holiday gift cards are feeling a lot less like the gift that keeps on giving.

Over the past few years, gift card popularity exploded and retailers rushed to display new merchandise the day after Christmas, hoping to attract shoppers flush with new cards.

Retailers could count on consumers to splurge on full-priced merchandise or spend all the money on the card, plus a few dollars more.

But as shoppers have witness a slew of retail bankruptcies this year (Sharper Image, Linens N Things, Mervyn’s, Circuit City), they are showing some reluctance toward buying the cards as gifts for friends and relatives.

A survey by America’s Research Group conducted for Reuters found that 43.2 percent of respondents said they will give gift cards less often this year because they worry that those cards would be worthless if a retailer files for bankruptcy.

Additionally, with retailers already rolling out tremendous discounts to entice consumers to spend their limited dollars, shoppers may find they can buy presents this year for less than the amount they were planning to spend on a gift card.

“You’d rather buy a $75 sweater for $30, than a $50 gift card,” said NRF spokeswoman Ellen Davis.

Roughly 10 percent of sales during the November-December holiday season happen the week after Christmas, according to the National Retail Federation. But weaker gift card demand could make ringing up those sales, in an environment where shoppers are already loathe to spend, an even bigger challenge.

(Photo: Reuters)

Check out Circuit City’s bankruptcy filing.
 
It’s been expected for some time, but Circuit City on Monday said it filed for Ch. 11 bankruptcy reorganization.
 
The thing is that there is some doubt about whether reorganization will work.
 
“We would note that we have not seen a consumer electronic retail(er) successfully reorganize in Chapter 11 in our 24 years in this space,” Credit Suisse analyst Gary Balter said. 
 
“One reason is that consumers become reluctant to buy extended service warranties from chains in bankruptcy and ESP’s are a key part of the profit formula,” he said in a research note.

Tweeter filed for bankruptcy protection in June 2007 and was later bought by Shultze Asset management.  But that chain filed for Ch. 11 again last week.
 
There are a lot of places out there to buy flat screen TVs, DVD players, video games and the like and that competition from Wal-Mart, Best Buy and others is one thing that put pressure on Circuit City.
 
Circuit City lost money in five of the last six quarters and as the global credit crunch pinched suppliers, those suppliers have tightened credit terms.
 
Circuit City already said it is shutting down 155 stores.  But the bankruptcy filing is a sign the company didn’t even have time to wait through the key holiday shopping season before reorganizing.  Or the weakened economy could just mean that there wouldn’t have been enough demand to matter.
 
So Circuit City hits the reset button and hopes it isn’t “Game Over.”
 
Also in the basket: 
 
Hard times for European luxury firms (WWD, subscription required)
 
McDonald’s Oct. same store sales rise 8.2 pct
 
Tesco shares fall on Asia slowdown worries

(Reuters Photo)

Circuit City employees say they’re not surprised the struggling retailer is closing 155 stores in an attempt to remain solvent amid deteriorating liquidity and tighter credit conditions from vendors.

Employees interviewed by Reuters correspondent Chelsea Emery at Circuit City’s Paramus Towne Square, New Jersey store seemed resigned to difficut times ahead. The store is not among the 155 slated to close and employees who work there declined to give their last names.

“People thought (this news) was coming with the economy. It’s not a big surprise. They’ve (corporate headquarters) got to do what they’ve got to do. They’re not going to get bailed out like Lehman Brothers,” said television salesman Marko. “People aren’t going to buy plasma TVs when they can’t buy milk … We (employees) are trying to stay positive as we can.”

David, a supervisor for Firedog, said the store had a meeting this morning about the closures. “We’re all nervous,” he said, adding that employees had been told earlier in the year that any store closures would happen much later, even into January. “This (news today about 155 stores) is unexpected.”

Employees “are all nervous. We’re trying to fight to stay open,” computer salesman Anthony said.

(Photo/Reuters)