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Retailers Fear Market Collapse Will Ruin Their Holiday

October 25, 1987|MARY ANN GALANTE | Times Staff Writer

From the chic Saks Fifth Avenue to Russo's-World's Largest Pet Store, Orange County retailers are wondering whether the stock market collapse will turn out to be the grinch that stole Christmas.

Among retailers here, hardest hit so far have been those stores selling big-ticket items such as furs, computers, yachts and luxury cars. Some already have had customers cancel orders. Others expect that they will need to discount merchandise more than in years past to help lure holiday shoppers.

One ray of hope seen by some retailers is that the tumultuous stock market might settle down soon, followed by a decline in interest rates. Lower interest rates, in turn, could spur sales, they believe.

"If the market continues to be upset through Thanksgiving, it will be a lot different than if it just settles down now," said Robert Kahn, publisher of Retailing Today, a trade newsletter based in Lafayette, Calif. If the market remains calm, Christmas buying should be brisk, he said. "Memories are relatively short."

That opinion is borne out among many retailers who express a wait-and-see attitude and are keeping their fingers crossed that potential upward swings in the market will make the holiday season bright.

"If the market continues to rise, business will be restored," said a New York spokesman for Saks Fifth Avenue. "If there continue to be swings and fluctuations, there will be less confidence and business could be affected."

Nordstrom, the Seattle-based chain, so far has not seen any effect.

"We assumed that people would be reacting more carefully, but it doesn't seem to have any effect at all in our business," especially in Southern California, said John N. Nordstrom, co-chairman of the chain.

But in Orange County, some retailers who cater to the upper crust are very concerned--and with good reason.

One Newport Beach yacht broker who asked not to be identified faced a cancellation of a $50,000 order for a sailboat this week.

The Australian buyer telegrammed that "in view of the staggering events in the . . . financial markets," he could not close the deal. Though the buyer has another month to complete the deal, "obviously, there's a ripple when an event like this takes place," the broker said.

The news also does not bode well for dealers of luxury cars.

"We haven't necessarily seen it yet, but I've got to believe that somebody buying a $178,000 automobile is going to look at his financial situation when he might have lost a lot of money in the stock market," said Michael Sillman, general manager of Newport Auto Center, which carries Rolls-Royces, Bentleys, Porsches, Audis and high-end Chevrolets.

And the loot under the tree is less likely to include computers.

A customer of one high-tech store, Irvine's Entre Computer Center, canceled a $4,000 order this week. At Personal Computer Centre in Mission Viejo, branch manager J.R. Cusick said end-of-the-year business could drop by as much as 10% to 15%. "Instead of $300,000 a month, we might see $200,000 to $250,000 or so for the next two months," he said.

At Newport Beach's Fashion Island, Michael Jacques, owner of M. Jacques fur salon, said he thinks that "people's minds are not on luxuries right now."

"It has slowed, for sure, but ask me in two weeks how it will affect things later." While business in past recessions didn't suffer much, he said, "I may have sales for Christmas, which I seldom have."

Some retailers--even those catering to the affluent--aren't so worried.

The head of Admiral Yachts of Newport Beach said he hopes the company won't see the sales decline that he had initially expected.

"Now that interest rates are coming down, it should have a nice, positive effect," said Steve Bernat, president of the company, which sells new boats for up to $2.2 million.

To help avoid sagging sales, some store owners are considering pegging their promotions to Wall Street. Dan DiGiacomo, owner of Russo's-World's Largest Pet Center, is mulling over advertising that suggests customers "trade in your old used stocks toward a dog." With some purebred pooches--such as a Shar-pei--costing as much as $2,200, some shoppers may have to do just that. Still, DiGiacomo--who owns stores in Fashion Island, Laguna Hills Mall and Bristol Town and Country Shopping Center--is optimistic.

"People cut out a lot of big expenses . . . but a pet is a family member," he said. "So a trip to see us is like going to the grocery store."

Those selling other necessities--of sorts--also aren't concerned.

"If (the crash) had an impact, it helped the bar," said Bob Peck, managing partner of the Savannah Grill in Newport Beach. "Let me just say that (on Monday night) there were many high-quality vodkas and scotches being set up."

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