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Weak holiday sales foreseen

A retail trade group forecasts slower sales growth as it sees worried shoppers curbing their spending.

September 23, 2008|From the Associated Press

NEW YORK — Holiday sales are expected to grow at the slowest pace in six years as shoppers worry about jobs, the housing and stock markets and high gasoline and food prices, according to a forecast from the National Retail Federation being released today.

The outlook from the retail trade group joins other weak holiday predictions issued so far that probably will lead to aggressive discounting and pre-Thanksgiving sales blitzes as stores try to pry dollars from frugal shoppers.

Merchants have also scaled back holiday inventories and seasonal sales staff from last year. The challenges are compounded by a holiday season that has five fewer days between Thanksgiving and Christmas Day than in 2007.

"You don't have a good picture," said Rosalind Wells, the retail federation's chief economist.

Last week's financial turbulence, from Lehman Bros. Holdings Inc. filing for bankruptcy protection to a proposed $700-billion government bailout of the financial system, "only increases the uncertainty and anxiety," she said.

Wells said she didn't expect an economic turnaround until the second half of next year.

The Washington-based trade association predicted that total holiday sales would rise a modest 2.2% for the November and December period from last year, to $470.4 billion. That would be below the 10-year average of 4.4% holiday sales growth and a bit below the 2.4% gain last year. It would also be the slowest pace since a 1.3% increase in 2002.

Total retail sales figures from the retail federation exclude business from auto dealers, gas stations and restaurants. The estimate also excludes online sales and reflects last week's financial turmoil, Wells said.

Two other forecasts, from Deloitte and TNS Retail Forward, that were made before the recent market turbulence had predicted the weakest holiday sales growth since 1991 -- although they use different metrics.

Deloitte expects total holiday sales -- excluding motor vehicles and gasoline, but including online sales -- to rise 2.5% to 3% in the November-through-January period, less than last year's 3.4% gain. An increase of 2.5% to 2.8% in that period would be the smallest gain since 1991, the company noted.

TNS Retail Forward, a global market information group, sees retail sales rising 1.5% in the October-through-December period, the weakest performance since 1991. The figure includes online sales but excludes sales from gas stations, supermarkets, restaurants, drugstore chains and auto dealers.

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