Russ, what do you think about coming X-mas sales? Wall Street expects blockbuster sales.
Holiday Shopping Is Expected
To Justify Retail-Stock Rally
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"Since the blowout holiday season of 1999, retailers have been dogged by recession, terrorism and war -- a business environment, frankly, that only the Grinch could appreciate," Mr. Steidtmann wrote in a recent report on holiday spending.
All this begs the question: Are consumers going to return to the shop-till-they-drop mentality that helped elevate retail stock prices higher this year?
With some retailers snagging 25% to 40% of their annual sales during the holiday season, the issue is pressing.
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The National Retail Federation, the world's biggest retail-trade association, said it expects holiday sales to rise 5.7% percent this year to $217.4 billion, the biggest increase since 1999. Its survey found that the average consumer plans to spend $671.89 this holiday season, up from $648.85 last year.
Deloitte Research is even more bullish. It expects non-auto retail spending to jump 6.5% to 7% over the holidays -- "one of the best holiday seasons of the past 10 years" and better than the average 5.2% annual gain for holiday spending in the past decade. Merrill Lynch says U.S. general merchandise sales should rise 8.7% in November and December.
Economists agree that the consumer hasn't tired yet.
"It's true that the impact of the tax cut has waned, but there is still a tailwind driven by improvement in the stock market, some signs of [improvement] in the job market, low interest rates, and a continued rise in home prices, as well as increases in wages," says Lynn Reaser, chief economist at Banc of America Capital Management. She concedes that consumer spending has "moderated," but says she expects it to accelerate again toward year-end.
Economists and industry types say inventories are very slim this year, so the atmosphere is likely to be "less promotional" -- meaning, fewer sales, bigger profits. "Retailers are likely to see improvement in profit margins as inventories are quite lean … they'll still be promotional but not quite as aggressive" as we've seen in the past four years," says Ms. Reaser. NRF agrees, saying the "golden rule for consumers this holiday is 'Buy it when you see it.' "
Meanwhile, the shopping season -- or stretch of time between Thanksgiving and Christmas -- is a day longer this year than it was last year.
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