NEW YORK – Get ready for the midnight sales specials, 60 percent-off discounts on holiday toys and racks of marked-down merchandise.

The holiday season is always about price wars. But retailers are bracing for what could be the most brutal holiday season in recent years after Wal-Mart Stores Inc. announced Thursday a disappointing October sales report and a bleaker outlook for November.

Along with its bad news, the world’s largest retailer had a warning: It will use price as a weapon as it competes for consumer dollars this holiday season.

Shoppers will be the beneficiaries, enjoying bigger discounts on toys and electronics like flat-screen TVs even earlier than usual in the season. But heavy price cutting is problematic for retailers, whose profits shrink along with prices. The most vulnerable this season are likely to be Wal-Mart’s discount rivals including Target Corp., toy sellers like Toys “R” Us Inc., and electronic retail chains such as Best Buy Co. Inc., according to Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.

In apparel retailing, moderate-price players like Kohl’s Corp. and J.C. Penney Co. could also feel some pain.

Wal-Mart blamed its lackluster October sales in part on a failed women’s fashion strategy that was too trendy for its customers, and on disruptions from a store remodeling program. But the company is wasting no time in battling its rivals – next week, Wal-Mart hopes to lure shoppers with $398 Compaq Presario laptop computers.

“The news from Wal-Mart is definitely discouraging,” said Perkins. “They are going to be very price aggressive. And it is going to have an effect on everyone. It is going to force other retailers to cut their prices, which in turn will squeeze their profit margins.”

The latest development from Wal-Mart came as the nation’s retailers reported mixed October sales, the result of consumers taking a breather after going on a buying spree in September.

BJ’s Wholesale Club Inc., Pier 1 Imports Inc. and Gap Inc. were among the other retailers with disappointing sales. Meanwhile, department stores scored again, with robust business at such companies as Federated Department Stores, J.C. Penney Co. Inc. and Saks Inc.

The International Council of Shopping Centers-UBS sales tally rose 3 percent in October, less than the 4 percent gain in September. The tally is based on same-store sales, or sales opened at stores opened at least a year. Same-store sales are considered the best indicator of a retailer’s health.

The outlook for the holiday shopping had brightened for retailers since August amid falling gasoline prices and subsiding interest rates. In fact, earlier this fall, the worry was that stores may not have enough inventory amid better-than-expected consumer spending. That meant that stores could be stingy with discounts.

But that’s now changed. Marshal Cohen, chief analyst at NPD Group Inc., a market research company in Port Washington, N.Y., says this holiday season could be as promotional as three years ago, when Wal-Mart spoiled the season by sharply discounting hot holiday toys below cost.

This year, “the consumer is going to be the beneficiary of all this nervous energy,” Cohen said. He believes more stores will embrace midnight specials, a growing trend, on the Friday after Thanksgiving.

Still, analysts are sticking to their holiday growth forecasts, which call for robust gains, though not as strong as a year ago.

The National Retail Federation is projecting a 5 percent gain in total holiday retail sales for the November-December period, less than the 6.1 percent a year ago.

But consumers’ willingness to spend is largely influenced by their own job security. While the job market has been steady, recent monthly reports from the Labor Department have showed slower growth. And consumers’ confidence, while still high, weakened in October, dragged down by their concerns about the job market, according to the Conference Board.

Wal-Mart, which should have prospered thanks to falling gasoline prices, reported a meager 0.5 percent gain in October same-store sales; it was hurt by its namesake division, which eked out a 0.3 percent gain. Sam’s Club had a 2.0 percent same-store sales gain. A big problem at Wal-Mart was that it overstocked stores with too many trendy items like skinny jeans, officials told Wall Street analysts.

Wal-Mart’s results were below the 1.5 percent gain expected by analysts surveyed by Thomson Financial.

The company estimated that same-stores sales should be unchanged in November from a year ago.

“As in September, apparel sales, particularly in women’s apparel, were softer than expected,” said Tom Schoewe, executive vice president and chief financial officer at Wal-Mart in a statement.

Meanwhile, rival Target had a solid 3.9 percent gain in same-store sales, though the figure was slightly below the 4.2 percent estimate from Wall Street.

Department stores recorded solid gains again. And analysts believe they should have a solid holiday season – Perkins noted that upscale department stores like Nordstrom Inc., and Saks Inc., which both posted better-than-expected October sales gains, won’t be affected by the price wars.

And Federated, which acquired May Department Stores Co. last year and posted better-than-expected sales gains, shouldn’t be that vulnerable. The company, which also operates upscale Bloomingdale’s, has been upgrading its Macy’s brand as it transforms most of its May Co. stores to Macy’s.

But Perkins said Penney and Kohl’s Corp, both mid-brow department stores, may need to discount more heavily as they face stiffer competition from Wal-Mart.

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