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) -- Black Friday has historically been regarded as the day when retailers move from a loss (red) into profit (black) for the year. While the explanation no longer holds much relevance, this year the day after Thanksgiving could be critical for several major retailers.

Following several quarters, and in some instances, years of mishaps getting back on track during the holiday season is critical for those with fading brands, merchandise misses, internal blunders and large store fleets.

Specifically, in the apparel space, many will be working to reduce inventory levels, which have ballooned in recent months, said Dana Telsey of Telsey Advisory Group.

For a few retailers, the holiday season could be a true turning point. For others, it could solidify their position at the bottom of the barrel.

The November and December selling period account for a big chunk of sales for retailers, making up anywhere from 25% to 40% of total holiday sales, according to the National Retail Federation.

Here's a look at the retailers heading into the holiday season with challenges that are relying on Black Friday madness to revive their business.

Best Buy

Best Buy


is hoping to dispel its image as being a "showroom for



" this holiday season.

Last year, the electronics retailer dropped the ball when it came to offering compelling Black Friday promotions. It seems this year that Best Buy has realized it needs to be competitive on price against its discount rivals Amazon,




Costco Wholesale





. Typically, Best Buy is anywhere from 15% to 30% more expensive on certain items than its peers, according to Rahul Sharma, founder of Neev Capital.

The company is offering free shipping online on everything, doing away with minimum order requirements and removing exclusions. It is also bringing some of its door busters online Thanksgiving Day in the hopes of snagging shoppers early.

According to deal experts, Best Buy is also advertising some of the most attractive Black Friday door busters, specifically in televisions.

"We believe Best Buy is positioned for solid sales Black Friday weekend partly because the company is being much more aggressive on TVs year-over-year," J.P. Morgan analyst Christopher Horvers wrote in a note. "In 2010, the company backed off using TVs as a traffic driver and this contributed significantly to negative comps. We expect the Thanksgiving weekend reviews from peers to be positive next week and to add to the building optimism around the potential for positive comps."

Best Buy is being awarded the "most promotional retailer award" by most retail and deal experts.

"In the past few years Black Friday deals

at best Buy haven't been that good and I was wondering if this was going to be another year where I was going to be disappointed," said Jon Vincent, who runs the deal site "But Best Buy has some of the best deals out there."

Still, Brad Wilson, who runs the deal site and, warns that just how successful Best Buy is on Black Friday comes down to its inventory levels.

"Best Buy is notorious for being stingy, having just five of the $200 HDTVs, and I am leery of their promotions," he said. "In the past, Best Buy hasn't been able to honor some of their prices because of lack of inventory and I wonder if customers will actually be able to get some of these deals."

Best Buy's sales have declined for five consecutive quarters and the company cut its profit outlook in September.




desperately needs to prove its brands are still relevant.

The specialty retail chain is heading into the holiday season off disappointing third-quarter results. During the three-month period, the company reported a 36% decline in profit to $193 million, or 38 cents a share, while revenue slipped nearly 2% to $3.58 billion. U.S. same-store sales fell 5%, hurt by its women's apparel business. Gross margin eroded for the fifth consecutive quarter.

Its Gap chain has reported annual same-store sales declines in North America for the past six years.

But CEO Glenn Murphy said he expects a shift starting in the holiday season.

"When people go to stores in December, they'll start seeing the beginning of some changes to the business, when it comes to its aesthetic and quality of the product," he said on a conference call with Wall Street last week. "Between the product improving at Gap, and a global marketing platform that I think we can stand behind, I'm feeling better about 2012 when it comes to Gap."

In October, Gap said it will shutter nearly 200 namesake stores, bringing its Gap brand store base to about 700 in North America by 2013. Overall, the company plans to reduce its square footage in the U.S. by 10% in the next two years.





finally reported positive U.S. same-store sales in the third quarter after nine consecutive periods of declines, the majority of the boost came from 4% food inflation. Wal-Mart's grocery division was trending up, but its other categories like apparel and home goods were still in negative territory.

The discount giant is looking to regain its status as the everyday low-price leader and recapture shoppers it lost due to some of its own internal blunders.

Wal-Mart's third-quarter results last week prove it is committed to investing in pricing and it has been working aggressively to restock hundreds of thousands of items it removed from shelves under its "Project Impact" initiative.

"We believe the combination of stepped-up marketing, longer hours, intensified pricing efforts and a re-launch layaway program, coupled with easy year-ago comparisons (negative 1.8% U.S. same-store sales) should drive better Black Friday performance at the expense of others," Goldman Sachs analyst Adrianne Shapira wrote in a note.

But Wal-Mart's focus on lower prices is coming at the cost of the bottom line, as Wal-Mart's third-quarter profit slipped nearly 3% to $3.34 billion and its gross margin narrowed to 24.6%.

"While Wal-Mart's improving sales momentum should power better Black Friday sales, we expect it to come at the expense of profitability," Shapira wrote. "Much like in the third quarter, we believe the flow through to be increasingly challenged as the cost of doing business is going up. We continue to expect gross margin compression and steeper investments, especially in e-commerce, to challenge their ability to deliver a better bottom line. This should not only hamper flow through at Wal-Mart, but it peers as well, rendering it a more price competitive holiday season."

J.C. Penney

J.C. Penney


is lagging behind department store rivals like







The company, which is very much in a transitory stage, swung to a loss in the third quarter and provided a fourth-quarter outlook that fell short of Wall Street forecasts.

J.C. Penney is betting on its new CEO Ron Johnson, the man credited with the success of



retail stores. Since taking the post on Nov. 1, Johnson has started to revamp the management team, hiring two former Apple colleagues to fill the chief talent officer and chief operating officer roles.

The department store has been attempting to revitalize its stale image, including brands like MNG by Mango and Sephora and purchasing the Liz Claiborne brand.

But it may be too late for any monumental changes to be evident this Christmas, said Craig Johnson, president at Customer Growth Partners, even with new management.


It looks like it will be another difficult holiday season for




The flailing department store reported a wider-than-expected loss in its third quarter as sales continued to fall.

>Sears Pegged as Dinosaur by Shoppers

To turn around the four-year sales slump, hedge-fund manager Edward Lampert and Sears' new CEO Lou D'Ambrosio are turning to contracting out some of its brands and leasing store space to help boost the bottom line. While this may be a near-term fix, experts agree that

this strategy is only a Band-Aid.

Steven P. Dennis, who previously held several executive roles at Sears including acting chief strategy officer, said this strategy raises some problems.

"If Sears markets brands externally and shoppers can get Craftsman or DieHard at Costco or Ace Hardware, they have taken away the biggest reason to go to Sears and makes the stores even less relevant," said Dennis, who now runs a consulting firm.

Sears has been aggressively marking down and pricing pressures in appliances have squeezed margins. The

stores have also built up a reputation of being old-fashioned and out of date.

But the company is hoping deep Black Friday discounts at its namesake and Kmart stores and its layaway program will help spur sales this holiday season.


Reported by Jeanine Poggi in New York.

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