Shop Talk

Retailers, consumers and prices

Consumers shrug in the face of lean inventory

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bored1Lean inventory may be the secret weapon that retailers are depending on to survive the holiday season with earnings intact.

But consumers don’t exactly seem to be quaking in their boots at the prospects of finding empty racks this Christmas season.

According to the ICSC, with 18 days until Black Friday and 46 shopping days until Christmas, the consumer appears “unfazed” by reports of retailers running low on inventory.

The ICSC and Goldman Sachs’ 2009 Holiday Spending Survey found that 81 percent of consumers said lean inventories are not motivating them to shop earlier than in past seasons.

Check Out Line: Holiday doldrums?

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RETAILTRAFFIC/Check out the latest retail forecast.

The National Retail Federation expects U.S. holiday sales to fall for the second consecutive year, but this year’s drop should not be as steep as it was last year.

The retail industry trade group expects retail sales in November and December combined to slip 1 percent to $437.6 billion.  Last year, such sales fell 3.4 percent to $441.97 billion.

Check Out Line: A glimmer of holiday optimism

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USA/Check Out this slightly more optimistic holiday sales forecast.

The International Council of Shopping Centers (ICSC) said the 2009 U.S. holiday season is likely to be “a lot better” than last year, with sales rising roughly 1 to 2 percent.

The forecast, perhaps the most bullish yet, comes after a dismal 2008 holiday season that by some accounts was the worst in about 40 years.

Check Out Line: Bringing back discretionary spending

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costco-shopperCheck out analysts’ calls on middle and upper income shoppers.

Thursday’s sales reports showed that some consumers have started to buy their little luxuries again, a trend retail industry experts say is crucial for sales to rebound this fall and winter.

Michael Koskuba, Portfolio Manager for Victory Capital Management‘s Victory Large Gap Growth Fund, recommended that investors look into discount names with a discretionary bent, such as Target, which he owns in his fund.

Check Out Line: Retail joy in sunny days?

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shop11Check out the welcome warm weather.

The long anticipated arrival of warm weather helped boost U.S. consumer spending 1.6 percent in the week that ended June 27, from a week ago – the strongest gain since matching its Jan. 31 results, according to a stody by the International Council of Shopping Centers and Goldman Sachs.

On a year-over-year basis, sales rose 0.6 percent.

“A bout of seasonally hot weather late in the week helped to trigger consumer spending,” ICSC chief economist Michael Niemira said in a statement. “This late June sales spark was a welcome sign for the industry and the economy. ”
 
However, he added, ”for the month as a whole, June sales continue on track for a ‘tough’ month with the early part of the month weighing heavy on its performance.”
 
Excluding Wal-Mart Stores, which has stopped reporting monthly sales, the ICSC expects June sales to be down by about 5 percent.

Check Out Line: No stimulus checks, gas prices rising

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Check out a lack of government stimulus checks and rising gas prices weighing on consumers –and the retailers that are trying to sell them stuff.

bbyBest Buy reported lower earnings for its fiscal first-quarter (which ended May 30), and said sales at its stores open at least 14 months declined the most during May. A year ago it got a boost in that month when shoppers came into its stores to spend those government stimulus checks.

Check Out Line: Another week, another sales drop

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Check out sales falling again in the latest week.
 
The International Council of Shopping Centers-Goldman Sachs chain store sales index showed a 1 percent drop in the week ended Saturday, the worst week since April 5. Year-over-year, the index increased four percent.
 
But the ICSC did point out some positive factors for retailers: traffic improved at discounters, department stores, wholesale clubs and even apparel retailers.
 
Perhaps consumers can afford to drive to those stores again.

According to the U.S. Energy Information Administration, the average retail price of a gallon of regular-grade gasoline in the United States fell for the eighth consecutive week to $2.22 on November 10. That’s a $1.61 per gallon drop since September 15, ICSC noted.
 
Even the rising unemployment figures could be interpreted in a positive light. 
 
A J.P. Morgan research report notes that in the past five recessions, unemployment increased by about 2.5 percentage points from the low to the high, while retail stocks bottomed about halfway through.
 
“Although we’re not ready to call a bottom, we’d note that unemployment has increased (1.7 percentage points) from its recent sustained trough in February 2008, more than the historical halfway mark of past recessions,” analyst Charles Grom wrote.
 
The unemployment rate was 6.5 percent in October and J.P. Morgan economists see it peaking at 8 percent in the second quarter of 2009, so by that estimate, the rise in unemployment is more than halfway done.
 
Not in time for Christmas, but is there a light at the end of the tunnel in 2009?
 
Also in the basket:
 
A Raisinet recession at movie theaters
 
In recession, ladies recycle last year’s dress
 
Markdown mania squeezes vendors (WWD, subscription required)

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