Retailers face spooky Halloween as customers cut back on spending

Halloween is scaring US retailers this year as spending on the spooky holiday is expected to fall by 5%.

The National Retail Federation expects Halloween sales to fall to $11.6 billion, with costumes and greeting cards accounting for the biggest sales, Bloomberg reported Saturday.

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

The company, owned by Apollo Global Management, saw a surge in Halloween sales as customers began stocking up earlier this year, Bloomberg said, citing people who participated in an earnings call last month had.

But the increase wasn’t enough to prevent a 20% drop in second-quarter profits to $50 million compared to the same period last year, according to Bloomberg.

Home furnishings chain At Home, which describes itself as a “superstore for home and vacation” and is owned by private equity firm Hellman & Friedman, said in its earnings call that it is off to a strong start after flat net sales in the second quarter which experienced Halloween spending of around $443 million, Bloomberg said.

Attorney Erica Weisberger, a partner at Deveboise & Plimpton who specializes in corporate restructurings and litigation over distressed investments, said the dire Halloween forecast came in a year that was “a perfect storm for retailers of all stripes.”

“Inflation, high operating costs and reduced consumer spending pose unique challenges for brick-and-mortar retail, and online retailers are struggling with strong competition from e-commerce giants like Amazon,” Weisberger told Bloomberg.