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Poor Holiday Season Reported by Retailers : Economy: Bargain-hunting binge Tuesday fails to salvage period. Southland fares slightly better than nation.

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TIMES STAFF WRITER

Shoppers turned out in droves on Tuesday and found some of the biggest bargains in recent memory as merchants throughout Southern California and the nation sought to salvage the worst holiday season in years.

But Tuesday’s turnout wasn’t enough to rescue a disappointing season in which the nation’s retailers are expected to post a sales gain of between 2% and 3% over the same period in 1994, many retail economists said. That compares to last year’s rise of nearly 6%. One month ago, these economists had predicted increases of between 4% and 5%.

On the bright side, after suffering through years of regional recession, Southern California--with a projected sales increase of 3%--enjoyed marginally better sales than the nation, analysts said. Many chains said their Southland stores have performed relatively well.

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That, however, is little consolation to a retailing industry that is suffering from some basic shifts in consumer attitudes and demographics, analysts said. These changes could portend continued slow growth for the Southern California and national economy.

“There has been fundamental change in consumers’ attitudes built during a recessionary economy--and it’s a mentality that’s value-driven,” said Richard Giss, a partner at the Los Angeles offices of the accounting firm Deloitte & Touche.

“Shoppers will no longer even look at merchandise unless it has a ‘sale’ sign on it,” said New Jersey-based retail economist Kurt Barnard.

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For some shoppers, said Barnard, the reluctance to spend is reinforced by concern about high consumer debt, stagnant wage growth and job insecurity resulting from downsizing at major companies.

“With the shaky economy, it can be disaster at any minute,” said Mark Mandeville, shopping Tuesday at the Mission Viejo Mall with his wife. “We spent about 50% less this year [on holiday gifts]. We spent about $800 because we’re trying to cut back and pay off bills.”

Also, baby boomers in their 40s--the group expected to provide the biggest spending punch for retailers--have been buying homes and purchasing home furnishings in recent years and are now in more of a savings mood, in part to finance their children’s education. Indeed, a drop in the sale of home furnishings this holiday season shows that the demand cycle for those goods is turning downward.

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In addition, people in their 30s and 40s are less interested in fashion, analysts said. More people are working from home and dress at the workplace is more relaxed.

“This is the first retail downturn not attributable to a recession,” Barnard said, calling this holiday shopping season the worst since 1989. “Specialty apparel chains are the big losers . . . There will be more retail mergers because companies are looking for ways to cut costs and there will be more than a few [retail] bankruptcies.”

Angela de Joseph of Los Angeles typified today’s price-conscious shopper as she browsed for deals on Tuesday. She looked for markdowns on expensive shoes at the Westside Pavilion but decided not to make a purchase until she could make price comparisons with stores in Beverly Hills.

“I’m shopping today because I like to get high-quality merchandise at a bargain price,” she said. “I’m making comparisons because I discovered--just after Thanksgiving--that I could actually bargain with merchants for lower prices.”

Indeed, stores in every retail segment--from Nordstrom and its menswear sale at South Coast Plaza to the annual holiday decorations sale at Images gift shop in Irvine--tried to appeal to the bargain hungry.

“I’ve already been to Target, and after this we’re going to HomeBase and then the outlet mall in Cabazon,” Irvine resident Marsha Wilson said while waiting for Images to open its doors at 8 a.m. “There are some great bargains.”

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Concern about weak retail spending was a factor in the Federal Reserve Board’s lowering of a key interest rate last week. However, the picture is a little brighter in Southern California. Johnson Redbook Service, which tracks retailing nationwide, said Tuesday that sales in Southern California were stronger than expected.

Sears was among the retailers faring well in the Southland. The company said it had its strongest weekly sales in history for the week ended Dec. 23 partly because sales in the Southwest were so strong.

Federated Department Stores--operator of the Bullock’s, Broadway, Macy’s and Bloomingdale’s chains--also was upbeat about its performance in California and other western states.

This will be the final post-Christmas sale for the Broadway name. Federated acquired Los Angeles-based Broadway Stores Inc. in October, and is converting 40 of the stores--or nearly half--into Macy’s and selling nine more to Sears, Roebuck & Co.

Federated is selling 10 more stores and the fate of another 21 remains undecided, with a decision possible later this year. As many as six will become Bloomingdale’s and the others could be sold, closed or retained and converted.

The Broadway at the Baldwin Hills Crenshaw Plaza is among the stores in limbo. In a bid to persuade Federated to retain and convert the store to Macy’s, some local residents earlier this month staged a rally near the site. Federated currently has no Macy’s stores in Southern California.

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“I’ve never shopped at a Macy but I would like to,” said shopper Recy King as she took a breather just outside the Broadway store at Baldwin Hills.

This also will be the final holiday season for the Bullock’s chain. Its 21 stores, all in Southern California, will be converted to Macy’s early next year. Bullock’s on Tuesday offered discounts ranging from 10% to 50%.

All major chains engaged in price-cutting to lure shoppers. Some consumer electronics firms offered 0% interest and delayed payment plans. “Year-end clearance” signs were common and other chains offered payment plans requiring “no money down” for big-ticket purchases. Others offered extra discounts for those who made purchases in the morning.

Retailers at the Sherman Oaks Galleria were among those discounting heavily, said Joy DeBacker, the mall’s general manager. DeBacker said many retailers lopped 10% to 50% off already marked-down prices. Prices on decorations and other seasonal merchandise--already put on sale before Christmas in an unusual step--were cut even further Tuesday, she said.

One of the first early-bird shoppers at the Sherman Oaks Galleria was Madelaine Mendelsohn of Van Nuys. She purchased shirts and athletic shoes that were 50% off, plus another 10% off with a newspaper coupon.

“You walk out feeling like you spent a lot of money, but you got good deals,” Mendelsohn said.

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Final retailers’ sales results for the month of December won’t be available until early January. But heavy price-cutting nationwide apparently helped many shopping mall retailers boost sales for the final seven shopping days before Christmas. Sales for the period were 19% higher than the same period a year ago, according to the International Council of Shopping Centers. (These results don’t include department stores, strip malls, independent stores and outlet malls.)

As a result, sales at regional malls were up 4.7% from Nov. 24 to Dec. 24, the council said. However, by cutting prices more deeply to attract that rush, many retailers also slashed their profit margins.

Indeed, for some merchants, Tuesday’s clearance sales were critical for survival. However, it’s already too late for some merchants. Mall posters advertising some “store closing sales” were more evident and a sign of tough retailing times.

However, store closings also are creating more bargain-hungry shoppers. Jean McClain of Van Nuys delayed her Christmas shopping until Tuesday. It was the first time she had ever shopped for gifts after Christmas. She and two sons took advantage of markdowns at an athletic shoe chain at 10 a.m.

“Now we’re going over to the Oak Tree [apparel] store because they’re going out of business,” she said.

Patrice Apodaca in the San Fernando Valley and Greg Johnson and Dan Margolis in Orange County contributed to this story.

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