Bah Humbug! Retailers Expecting Holiday Sales to Fall Flat…Again

October 7, 2009 • Shopping

The_grinch This doesn't look good. According to today's The NY Post, The National Retail Federation stated yesterday it expects holiday sales to fall 1 percent, to $437.6 billion, on top of last year's abysmal 3.4 percent decline. If September's back-to-school sales were any indication the holidays are again going to be a dud.

Mall-based outlets from Ann Taylor to Abercrombie & Fitch have already been slashing prices in a desperate effort to hold shoppers' attention, according to Credit Suisse analyst Paul Lejuez. This early, that's a bad sign.

Sluggish demand reflects continued malaise in the economy, industry experts say. While the stock market has rallied somewhat, unemployment is still almost in double-digit percentages. "Consumers are shopping less and less, and people who shopped in September only bought the deals," said Britt Beemer, president of America's Research Group.

The economy is particularly worrisome for higher-end shops like Saks which last holiday season started the pre-holiday markdown wars. While the luxury chain's shares have rallied in recent months as fears about its future have receded, holiday prospects look uncertain, said Charles Grom, an analyst at JPMorgan Chase.

However, much of the rally in retail shares — which have outperformed the broader market since March — are attributed to profit rather than sales outlooks. Indeed, most chains have slashed inventory and other costs to protect margins against the markdowns that still appear necessary to attract shoppers.

Still, "those markdowns are going to be worse than a lot of chains were hoping," Beemer said. Yikes.

Source: NY Post

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