Despite some bullish forecasts coming out of the retail industry in recent weeks, it doesn't look like it will shape up to be a Merry Christmas for everybody.
Both J.C. Penney and Sears shares took a tumble on Wednesday, after Penney's reported at its analyst day that same-store sales are lagging previous estimates, andBloomberg reported that three insurance firms for Sears' suppliers are reducing or cancelling policies tied to the department store.
The series of bad headlines follow those related to a third embattled retailer, RadioShack, which has been looking for a lifeline and announced last week that it has entered into an agreement to restructure a portion of its debt.
Making it more difficult for the trio of retailers hoping for a turnaround is the anticipation that the 2014 holiday season will be even more promotional—and therefore, cutthroat—than 2013.
"I think in the case of RadioShack and Sears, in particular, it's going to be very difficult for them to attract enough business even if this is a strong holiday season," said Ken Perkins, president of Retail Metrics, ahead of Penney's analyst day.
Although Penney's has made the greatest strides in its turnaround—including reiterating on Wednesday its third-quarter earnings guidance—the retailer noted the environment remains challenging. Belus Capital Advisors analyst Brian Sozzi said the stock was trading lower Wednesday because of comments that back-to-school selling ended on a weak note, and because conversion, or the ability to change shoppers into buyers, is down. That means that the holiday season could experience a slow start.
What's more, the retailer only made a "slight nod" to the future store closings that analysts are expecting. In a question-and-answer session with reporters, the company said it doesn't see any change in its store footprint.
"The profit margins seemed to save them," Sozzi said, referring to the company's projected 36.5 percent margin growth over the next three years.
Penney's also has shown signs of life in terms of sales. After about two years of declining same-store sales, the retailer has posted positive comparable-store sales for three straight quarters.
In Sears' case, Bloomberg's report added to investor concerns about the future of the iconic retailer, which analysts and other industry insiders have said would be better off liquidating. The embattled department store lost $573 million in the most recent quarter; that's on top of a $402 million first-quarter loss and a 2013 loss of $930 million.
Analysts, in particular, have called out the retailer's deteriorating store base and dwindling profit margins, the latter of which are tied, in part, to the costs of its loyalty program.
"The costs of Shop Your Way points compounded with traditional promotional discounts, giving rise to double promotional costs, have led to compressed gross margins," Standard & Poor's said in a note Tuesday.
Following the Bloomberg report, Sears spokesman Howard Riefs issued a statement saying that "Sears Holdings has significant financial flexibility to execute our transformation and meet our obligations." He also emphasized that "providers of insurance have never had to pay a claim to a vendor tied to [its] business."
"Together with proceeds from the Sears Canada rights offering [up to $380 million, of which we expect at least $168 million by Oct. 20, 2014], the $500 million dividend Sears Holdings received in connection with the Lands' End spinoff, the $165 million in proceeds of certain real-estate transactions and the $400 million short-term loan the company recently completed, SHC will have generated up to $1.445 billion in liquidity in fiscal 2014, " Riefs said.
"We also have no significant term debt maturities until late in 2018, we also have a vast real-estate portfolio, which is substantially unencumbered and whose 'accounting value' is reflected on our financial statements at about $5 billion, not to mention about $6.5 billion in inventory, much of which is already paid for."
At RadioShack, analysts have expressed doubt that more cash will be enough to save the electronics chain. The underlying issue, Wedbush analyst Michael Pachter has said, is that the company has failed to get the message out to shoppers that it's reinventing itself and carrying new products. What's more, the company just last year refinanced its debt, and it's already facing another cash crunch, Moody's senior analyst Mickey Chadha told CNBC last month.
RadioShack last week announced that Standard General, its largest shareholder at about 10 percent, and other investors replaced GE Capital as its lead lender, and will provide it with additional near-term liquidity.
Together, the three retailers stand in contrast to recent positive outlooks on the industry. On Tuesday, the National Retail Federation said it expects holiday sales will increase 4.1 percent compared to November and December of last year, and Deloitte said holiday sales sales will grow between 4 percent and 4.5 percent from November through January. PwC and AlixPartners, however, sounded a more sour note.
PwC expects average household spending will decline to $684 this year, down from $735 in 2013. AlixPartners said holiday retail sales will increase between 3.2 percent and 3.8 percent, which is well below the 10-year average (excluding 2008) of 5.1 percent.
Perkins said "it's certainly possible" holiday sales could reach the 4 percent to 4.5 percent threshold. But because he expects the season to be highly competitive—particularly in regards to price—there will be a greater burden put on retailers who are on the fringe.
"That's going to make it even more difficult," he said.
—CNBC's Courtney Reagan contributed to this report.