If you were hoping for an economic recovery, don't hold your breath. To hear retailers tell it, you'll have to wait until around Christmas -- next year.

Nearly every executive speaking to investors and analysts at the annual Goldman Sachs Global Retail Conference said the track of this recession will eventually look like a check mark, with a steep and sharp drop-off and a long, slow climb back up.

"Although the stock market and the press seem to see a recovery, if not right around the corner, early next year . . . there are many forces at work," said Julian Day, CEO of RadioShack Corp. (RSH). For one thing, many households that had been spending thanks to growing home equity now have negative home equity. Without economic drivers like rising home prices, any bump in sales thanks to incentives will be only temporary, Day said.

"Our crystal ball says we don't see any improvement in the economy -- if it happens -- until the back half of 2010," said Bruce Besanko, chief financial officer of OfficeMax Inc. (OMX). That was an opinion shared by most speakers.
A return of strong employment numbers is what it will take to get Americans spending again, said the retailers. The fear of a "jobless recovery" continues to sap consumer confidence and spending.

"Unemployment is a lagging indicator and most economists will tell you we're not at the peak of the unemployment situation," said Mike UIlman, CEO of J.C. Penney Co. (JCP).

Even shoppers who are employed will watch every penny for a while, said Mike Duke, CEO of Wal-mart Stores Inc. (WMT). He said spending at Wal-mart drops off markedly near the end of the month, even for staples like baby formula, then spikes upward after people receive their paychecks. In fact, he said stores open 24 hours see a surge of business after midnight the first of the month, when the paychecks clear.

Most retailers said back to school shopping was better than expected, or at least not as bad as they had forecast. But they warned nobody should get their hopes up for a strong holiday season. Like they did for back to school, stores have cut back inventory for the holidays to avoid a repeat of last year's markdown bonanza.

Thanks to the inventory adjustments and a comparison with the grim sales numbers posted last year, this year's fourth quarter is going to look relatively good, or at least not too bad, said the retailers. But they warned that doesn't mean the pain is over.

This year, stores will put more pressure on consumers to shop early because there won't be as much inventory out there, Ullman said.

The holiday season "is not necessarily going to be a positive experience for most retailers, but not the experience it was a year ago," Ullman said.


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