NEW YORK - November 6, 2008 - The nation's retailers saw their sales plummet last month to the weakest October level since at least 1969, as the financial crisis and mounting layoffs left shoppers too scared to shop.

The stunning and rare drop, from an already weak September, is further darkening the outlook for the holiday season and raising more concerns about the financial health of the industry, which is not expected to see a recovery until at least the second half of 2009.

A number of stores, including J.C. Penney Co. and Nordstrom Inc., cut their profit outlooks as they slashed prices on everything from coats to holiday ornaments in a desperate bid to pull in shoppers. Analysts expect a do-or-die holiday season for more retailers, which have already seen competitors like Mervyns LLC and Linens 'N Things forced to liquidate.

As merchants reported dismal sales figures Thursday, Wal-Mart Stores Inc., the world's largest retailer, was among the few bright spots as it benefits from shoppers focusing on basics. The discounter plans to cut prices on thousands of items over the next seven weeks.

But most other stores, from luxury merchants to teen retailers, suffered steep sales declines as consumers were spooked by shrinking retirement funds and volatile markets. The number of people continuing to receive jobless benefits reached its highest level in more than 25 years, according to government figures released Thursday.

Even warehouse club operator Costco Wholesale Corp., which sells items like TVs along with basics, posted disappointing results.

“Wal-Mart's solid performance is reflective of the weakness in consumer spending,” said Ken Perkins, president of research company RetailMetrics LLC. “As soon as the financial crisis hit, consumer spending dropped dramatically. ... Consumer spending ground to a halt in October.”

Michael P. Niemira, chief economist at the International Council of Shopping Centers, described October's performance as "awful."

“This reflects the severity of the current financial crisis,” he said.