NEW YORK — The holiday shopping season is always a make-or-break period for struggling retailers.
But this year, the fight to grab shoppers has intensified, making it difficult for stores to use the season that accounts for about 20 percent of the retail industry’s annual sales to bounce back.
Stores face cautious shoppers who are juggling stagnant wages and higher costs for food and health care. And Web-savvy customers are using information easily available on their smartphones to hold out for ever-better deals. All of that means that stores have had to discount more — and earlier — this holiday shopping season.
“If you’re a retailer on the edge, it’s harder to maintain your viability and return to profitability because of the intense promotional environment,” said Ken Perkins, president of RetailMetrics LLC., a retail research firm.
He expects fourth-quarter earnings for the 123 retailers he tracks will rise 7.7 percent, down from a projected 16 percent increase in June.
Here, four retailers with years of sales declines that could use a good holiday season:
Sears Holdings Corp.:
The problems: The Hoffman, Illinois-based company, which operates Kmart and Sears, has been struggling for years as it faces increasingly stiff competition from Wal-Mart, Target and Home Depot. Critics say Sears has failed to update shabby and tired stores.
Billionaire hedge fund manager Edward Lampert, now chairman and CEO, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. But that merger hasn’t been successful, and the company’s financial results keep worsening.
The company on Thursday said its revenue fell 13 percent in the third quarter. In the first three quarters of the year, Sears has lost $1.6 billion.
It’s on track to lose money for four straight years and record eight straight years of falling revenue when it reports its annual results early next year.
The fix: To raise money, Lampert is closing weak stores, cutting inventory and selling assets to raise cash to keep the company afloat.
Radioshack Corp.
The problems: Long known as a destination for batteries and obscure electronic parts, RadioShack’s problem has been that the functions of so many products it sold have been taken up by smartphones.
So it sought to remake itself as a specialist in wireless devices and accessories. But growth in that business is slowing because more people have smartphones and see fewer reasons to upgrade.
RadioShack’s shares are now trading below $1. It warned in September that it might need to file for Chapter 11 bankruptcy, which wasn’t unexpected.
The fix: RadioShack’s turnaround efforts have included cutting costs, renovating and closing stores, and shuffling management.
Aeropostale inc.
The problems: Teen retailer Aeropostale reported a widening loss and falling sales on Thursday, and its forecast for the holiday quarter mostly fell short of analysts’ predictions.
Aeropostale, like many traditional teen destinations including Abercrombie & Fitch and American Eagle Outfitters, has struggled with changing fashion tastes among teens. Those chains face intense competition from fast-fashion retailers like Forever 21 and H&M, which offer a wide and quickly changing array of clothing at low prices.
Aeropostale thrived during the depths of the recession because of its affordable logoed T-shirts and pants.
The fix: In August, Aeropostale reinstated its former CEO Julian Geiger. But Geiger told investors this week that the chain went too far to try to be trendy in its quest to rival fast fashion chains.
J.C. Penney Co.
The problems: J.C. Penney is still trying to recover from a botched transformation plan spearheaded by former CEO Ron Johnson that sent its sales in a freefall and resulted in mounting losses.
Mike Ullman returned to the CEO job in April 2013 and has stabilized the business by restoring discounts and basic merchandise. But it’s now up to Marvin Ellison, who will take over Ullman’s job in August, to remake it as a shopping destination.
The fix: In October, Ullman laid out a strategy to improve productivity, expand e-commerce and spruce up some departments that it said would boost sales to $14.5 billion by fiscal 2017.
That’s still well below the $17.23 billion it generated before the sales plunge. It remains to be seen whether it will further pare down its fleet, which totals about 1,100 stores. In its latest round of layoffs in January, it closed 33 underperforming stores and laid off 2,000 employees.
The prospects: Analysts are closely watching how Penney fares this holiday season after growth has slowed in an important sales measurement. A slow holiday season would make investors less confident in their business.
“It calls into question their turnaround strategy and whether it’s gaining traction or not,” Perkins said.