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Halloween Sales Forecast Looks Scary for Retailers

A survey predicts flat results as consumers curtail spending amid concerns about the shaky economy and public safety.

October 15, 2002|From Reuters

Consumers are spooked by a sluggish economy, which could make it hard for manufacturers and retailers to scare up the heady Halloween business they have seen in recent years.

A survey released Monday by the National Retail Federation forecast that U.S. sales of candy, costumes and decorations for Halloween would be flat, at about $6.9 billion, compared with last year.

Halloween "kind of went into a little bit of a slump," said federation spokesman Scott Krugman. "It might take a year or two, but we expect it to recover."

In 2001, Halloween sales nearly tripled from about $2.5 billion in 1995 as the holiday expanded beyond its traditional Oct. 31 date into more comprehensive autumn celebrations throughout September and October. It is the second-biggest shopping holiday, after Christmas.

This year consumers plan to spend about $44 per household on candy, costumes and decorations for the Halloween season, down slightly from about $45 last year, the federation predicts.

In addition to the U.S. economic slowdown, analysts said a number of high-profile abductions of children and the unsolved fatal shootings by a sniper in the Washington area may be adding to concern about public holidays involving children.

"A part of the flattening out is absolutely driven by ... a consumer change over the idea of Halloween and having your kids out," said Neil Stern, a partner with Chicago-based retail consulting firm McMillan/Doolittle. "That one is going to linger for a while."

A reduction in spending momentum could be particularly hard for candy makers such as Hershey Foods Corp., Kraft Foods Inc. and Nestle that depend on robust Halloween sales, analysts said.

Candy sales make up about one-third to one-half of all dollars spent on Halloween, the NRF said.

U.S. candy sales in the four weeks ended Sept. 7, the most recent period available, were down 1.5% compared with the same period in 2001, according to data tracking firm A.C. Nielsen. That is on top of a slim 1.5% gain in August.

"The September data indicated to me that Halloween sales were good but not great," said Merrill Lynch analyst Leonard Teitelbaum.

Overall retail sales for September, a key early indicator of Halloween shopping trends, are showing that big stores may have difficulty pushing the confections, costumes and decorations off store shelves.

U.S. consumers curtailed spending in the month, crimping growth at the nation's big chain stores and knocking the already anemic economy off course.

Wal-Mart Stores Inc., the largest worldwide retailer, met its lowered sales expectations, but said that although Hallo- ween-related sales improved through September, they "are not where we would like them."

One thing that might help manufacturers and retailers is the unseasonably warm weather, which could mean a spike in sales closer to the Halloween holiday.

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