No recovery under the Christmas tree, say retailers
Filed under: Economy, JC Penney, Wal-Mart Stores
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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Reader Comments (Page 1 of 4)
9-11-2009 @ 12:01PM
hank said...
well maybe people will concentrate on the supposed religious meanings of xmas instead of on an orgy of loot that this has become. what wold jesus do? but a lot of overpriced needless garbage for a pack of spoiled rotted greedy brats or do something nice for someone in need?
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9-11-2009 @ 10:23AM
Donovansdanes said...
Already, the retailers are starting with " its gonna be a bad holiday sales season". The merchants/retailers make this statement every year. Get over it. Price your merchandise accordingly. Don't try to sell over priced, poor quality items. And sales should do just fine. Consumers are not going to be paying top dollar, for poor quality, inferior merchandise of any kind.
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9-11-2009 @ 10:21AM
bailoutsos said...
"No recovery under the Christmas tree, say retailers" ---- Are you listening Bernanke? Or are you going to blindly believe what your lackeys tell you?
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9-11-2009 @ 2:20PM
mickey said...
Good call crystal ball people. Sales will suck. Too bad. Boo hoo, boo hoo, boo hoo.
9-11-2009 @ 5:11PM
JP said...
If everyone wants to do something nice for people this year, there are thousands of homeless children that could use your help. Buying tons of gifts is only going to make China richer. Let's take care of our own.
9-11-2009 @ 10:22AM
Gary said...
Retailers are just pessimistic. I say consumers are saving now and will binge spend during Christmas. Americans just can't say no to shopping forever. Its the American way !!!
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9-11-2009 @ 3:38PM
kelly said...
Not gonna happen in this house hold. Sales tax was raised 25% in my state. that means I can buy less, and nobody needs a bunch of crap anyway
9-11-2009 @ 10:53AM
Ken said...
Oh beauiful, for shopping malls, where wild flowers used to bloom. For shiny cars, and parking lots, theres always plenty of room! America, America, must every field become paved? While you adore, the sacred store, your soul becomes Enslaved!!!!
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9-11-2009 @ 12:03PM
KEN said...
This is not news this is only what i expected. with unemployment as high as it is, incomes of some of the people working dropping, credit card companies lowering credit limits and raising interest rates. and those who have been working unsure of their future employment. most Americans that can save are doing just that. Just about all Americans have cut back spending to the bare bones. most of the people I talk to are only buying for the children of their immediate family and just and nothing like previous years.
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9-11-2009 @ 12:03PM
Bubba said...
So how is Change doing for you???
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9-11-2009 @ 3:02PM
bailoutsos said...
What he meant was, if you want change, then pick every penny and dime you see on the ground if you want to survive.
9-11-2009 @ 11:02AM
linn said...
I think because credit card usage is being curtailed by everyone I know people will not have the cash for extravagant gift giving. In our family....gifts are going to be under $5 ea. and only for the children.
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9-11-2009 @ 11:08AM
JESSIE said...
but but but but the fed says the economy is improving, the resession is over, the skies are blue, the grass is green and everything is right with the world LOL
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9-11-2009 @ 11:12AM
Ken said...
Oh beauiful, for corporate greed, were told we should admire. Our laws are made by corporate lobbyists, Our President is a liar! America, America, thy ( Made in China) is a middle class curse! Stop buying it, because its s#it, or maybe something worse!
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9-11-2009 @ 3:16PM
THERESA M said...
YOU SHOULD HAVE WORRIED ABOUT JOBS GOING OUT OF THE COUNTRY 25 YEARS AGO ,WHEN EVERYONE THOUGHT IT WAS JUST GREAT . NO ONE COMPLAINED ! NOW FINALLY THE WHOLE COUNTRY IS FALLING APART , ! LITERALLY TOOK AN AWFUL LONG TIME TO NOTICE THAT SOME OTHER COUNTRY IS DOING OUR JOBS FOR 25 CENTS AN HOUR
9-11-2009 @ 11:35AM
Gary said...
Oh beauiful, for corporate greed, were told we should admire. Our laws are made by corporate lobbyists, Our President is a liar! America, America, thy ( Made in China) is a middle class curse! Stop buying it, because its s#it, or maybe something worse!---OUR PRESIDENT IS NOT LYING, we need to expand our green energy manufacturing base now. Just today we are learning that China is gunning for this business and hopes to take it from us, even though we invented it. But if we just keep burying our head in the sand and saying, drill for more oil, we will be left out and everyone will be once again crying, where are our jobs? Get with the future in energy now, gas and oil are the past. Otherwise, we are doomed to fail.
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9-11-2009 @ 11:38AM
Patriot said...
I am sure that all the unemployed americans can't wait to spend what money they have left on some foreign made crap ! I won't be giving any gifts that don't say made in USA.
Hey Obama ,what ever happened to you renegotiating our GATT and NAFTA trade treaties you said you would do when you ran for office???????????????
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9-11-2009 @ 3:44PM
Nicole said...
Give him time. He cannot do everything all at once.
9-11-2009 @ 9:01PM
Road house said...
LOL he will NEVER EVER do anything about either one of them. BOOK IT!!!
9-11-2009 @ 9:17PM
Tiggs said...
It's rather hard for the President to do anything at all when the opposing side act like spoiled children.