Retail: A Flat Holiday Season?

Posted by: Ben Steverman on September 21, 2009

For retail companies and their investors, attention is turning to the prospects for the U.S. holiday season.

Last year’s holiday season arrived just months after an economic meltdown. Consumers panicked and holiday sales fell 2.4%, the first decline since 1967.

Deloitte issued a forecast today saying it expects holiday sales be flat in 2009. The firm forecasts total U.S. holiday sales of $810 billion. (That’s November to January sales, excluding motor vehicles and gasoline.)

Says Carl Steidtmann, Deloitte Research chief economist, in a statement:

Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened by restricted credit availability, high unemployment and foreclosures. Americans continue to save at historically high rates while also paying down debt, and these factors combined suggest another chilly holiday season for retailers.

Making predictions like this is always difficult. Bad news could sour Americans’ mood even further before Christmas. Or, the economy could improve more quickly than expected. Workers who fear for their jobs could be resting easier in two or three months, while millions of unemployed workers could start finding work.

For investors in retail-sensitive stocks, the biggest near-term danger may be that expectations for the holidays get too high. Deloitte’s flat forecast is hardly optimistic. But it does suggest that retail may be stopping its bleeding. Retail’s agenda for 2010 will be to begin the healing process.

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Reader Comments

sam

September 22, 2009 10:12 AM

I expect Christmas sales to be down in all class segments. Even the rich have been hit by this collapse because their money was invested in fraudulent securities. Over the last 30 years more and more money went to people who didn't need to spend it. So it went into money investments, and I'm not sure who ended up with the real money.

econguy

September 22, 2009 10:23 AM

Why should we be concerned if Air Nance and the ACORN President are indifferent to budget discipline and revenues anyway. If cash for clunkers and retail effects of an $8k tax credit for home buyers saps income before the holiday season, a flat forecast may be overly optimistic.

jj

September 22, 2009 11:34 AM

Socks & underware for the kids. thats it.
Other relatives are getting cards and cookies.
the retail buying for Christmas is way out of hand anymore.

jj

September 22, 2009 11:34 AM

Socks & underware for the kids. thats it.
Other relatives are getting cards and cookies.
the retail buying for Christmas is way out of hand anymore.

Broke in Miami

September 22, 2009 06:28 PM

I'm getting everyone $20 gift cards---After the real estate collapse down here, I'm so broke, I can't even pay attention.

Gene

September 22, 2009 07:21 PM

Tricky to forecast. Consumers definitely want to spend but need the right signals and a perceived uptick. Otherwise it's going to be dismal again. I don't see waste returning within 24 months. But people really, really like to shop and eat out. It's become core to our culture.

Darren

September 27, 2009 06:10 PM

It would be a shock to me if sales aren't down. I think the 'recovery' from one of the largest market crashes in history. The economy is disintegrating and the supports that are needed to bring us out are not there. I'm sure even google.com will feel the effects of lower search volume and ad profit this season.

Rufus

October 11, 2009 12:33 AM

I am just planning to give out Personalized Christmas Ornaments. But buying expensive gifts nah ah.. Today's economy it's really hard.

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Businessweek’s Emily Thornton, Amy Feldman, Ben Levisohn, and Ben Steverman focus on matters great and small for investors, from the views of a hot fund manager to an explanation of the latest products devised by Wall Street’s rocket scientists. Exploring trends in any area, from bonds and stocks to closed-end funds and futures, always with an eye towards giving investors a better understanding of the sometimes confusing and often chaotic world of finance. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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