Retailers Face Scary Halloween As Customers Cut Back On Spending

Halloween is putting a scare into U.S. retailers this year as spending on the spooky celebration is forecast to fall 5%.

The National Retail Federation expects Halloween-related sales to decline to $11.6 billion, with costumes and greeting cards taking the biggest hits, Bloomberg reported Saturday.

Arts and crafts chain Michaels is offering discounts of up to 50% on Halloween decorations, party supplies and other merchandise, according to its website.

The company, owned by a Apollo Global Management, saw a spike in Halloween sales when customers began stocking up earlier this year, Bloomberg said, citing people who took part in an earnings call last month.

But the boost wasn't enough to prevent a 20% decline in earnings, to $50 million, during the second quarter, compared to the same period last year, Bloomberg noted.

The At Home furnishings chain, which bills itself as the "home and holiday superstore" and is owned by the Hellman & Friedman private equity company, said during its earnings call that it saw a strong start to Halloween spending after flat second-quarter net sales of about $443 million, Bloomberg said.

Lawyer Erica Weisberger, a Deveboise & Plimpton partner who specializes in business restructuring and distressed investment litigation, said the frightful Halloween forecast came during a year that's "been a perfect storm for retailers of all stripes."

"Inflation, high operational costs and reduced consumer spending have been especially challenging for brick-and-mortar retailers, and online retailers have struggled with steep competition from e-commerce giants like Amazon," Weisberger told Bloomberg.