MONTREAL -- Canadian women's clothing retailers are bracing for a difficult year as the entry of more international brands into the marketplace raises the possibility that once steadfast domestic fashion companies could be headed for financial trouble.

A weak spring has forced retailers to scramble in a losing effort to salvage the year by selling off inventory at deep discounts, said Randy Harris, president of Trendex NA, a leading expert on the Canadian apparel market.

"They're basically panicking because they're coming into the summer season with excess inventory...so what they've engaged in is cut-throat price competition in hopes of trying to clear the merchandise out of their stores," he said in an interview.

Reitmans (TSX:RET.A) endured one of its weakest quarters to start the year, while Le Chateau (TSX:CTU.A), Bikini Village (TSX:GBV) and Danier Leather (TSX:DL) also reported lower revenues and same-store sales.

Even some foreign retailers were hurt, though men's fashion retailers fared better.

Blame it on the growing number of U.S. companies who have gradually built their presence across the country. While Target and Marshall's are two of the more notable newcomers, other big foreign brands like H&M and Banana Republic increased their market share by driving down prices, said Terry Henderson of the J.C. Williams Group.

The impact is apparent in apparel sales figures, which fell 0.2 per cent during the first four months of the year, while women's clothing sales dropped two per cent, according to Statistics Canada's large retailer survey.

After starting "with one foot in the grave" because of the weather, Harris doesn't believe Canadian fashion retailers can recoup the losses over the rest of the year.

Many companies are losing market share as they fail to differentiate themselves from the growing crowd of popular U.S. and other foreign brands that are taking more and more of the fashionista's dollar.

But it's not just the discount apparel market that's getting hit, mid-priced retailers like Ann Taylor, Loft and J. Crew have also moved into the country after building reputations with cross-border shoppers. High-end department stores Nordstrom and Saks also have plans to open their first stores in a vie against Holt Renfrew.

Meanwhile, Canadian women's clothing retailer Jacob filed for bankruptcy in May and will close its 92 stores across the country.

Harris predicted that at least three or four retailers up to the size of Jacob will close after the Christmas rush.

"To some degree, some Canadian apparel retailers are dying the death of a thousand cuts," he said.

Henderson said small, privately-owned companies that are less inclined to invest in marketing and e-commerce are at the most risk and have struggled to differentiate themselves.

"When you had weaker competition you could make these mistakes," he said.

"Now you make the mistakes (and) there are so many people eating off your plate that they quickly grab a bigger and bigger chunk," he said.

Retailers that have the best chance of surviving are the ones that cater to their clientele and offer something fresh to offset the temptation of new brands, Henderson said, citing the success of clothing companies like Dynamite Group, which operates Garage clothing stores, and sportswear shop Lole.

Retail consultant Wendy Evans said the retail fashion sector faces many challenges with the discount market already crowded and the luxury segment about to face a similarly busy environment.

Despite the slowly improving economy, she doesn't see much of a positive upside at this point.

"We still have a very debt-ridden consumer and when our market does improve and interest rates go up, that's going to certainly dampen a lot of the disposable income that would be available otherwise for fashion and other products," she said.

Evans said Canadian retailers with a strong sense of direction can do well, pointing to Joe Fresh, Harry Rosen and Holt Renfrew as positive examples.

Department store operator Hudson's Bay (TSX:HBC) has increased its sales per square foot and made bold decisions about importing Saks and Lord & Taylor, taking advantage of the competitive opportunities that have emerged from the struggles of Sears Canada (TSX:SCC).

"I see a lot of retail expertise there. Not without their challenges but I certainly think that they're going to be successful over the next few years."