Retail holiday sales may suffer, but…

Joel Rose Sep 24, 2009
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Retail holiday sales may suffer, but…

Joel Rose Sep 24, 2009
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Kai Ryssdal: If you’ve been in a department store lately, you might have noticed that it’s beginning to look a lot like last Christmas. Markdowns all over the place. Promotions and rewards and gimmicks to get shoppers to buy more. Retail analysts are saying stores could suffer some of the worst holiday sales in decades. Joel Rose reports things may not be that bad.


JOEL ROSE: Best case scenario: this year’s holiday sales will be tiny bit better than last year’s, which were awful. But analysts say retail profits should be much better than last year. If that sounds like a contradiction, consider H&M. The trendy Swedish retailer announced third-quarter results today. Sales were lower than expected, but earnings were higher.

PATTY Edwards: We’re seeing that a lot throughout retail in general.

Patty Edwards is an analyst with Storehouse Partners. She says retailers large and small are cutting costs wherever they can.

Edwards: There’s less merchandise. They’re also cutting their sales staff. And in some cases, closing under-performing stores. And all of those help the earnings, but don’t depend on sales.

National retailers are also getting smarter about what kinds of merchandise they stock where. Macy’s spokesman Jim Sluzewski says his company is giving individual stores more influence over what they sell.

JIM Sluzewski: In Chicago, we have heard from customers that they needed larger size women shoes, specifically size 11. This has had a marked effect on shoe sales in those stores in those markets.

Sluzewski says Macy’s stores are also carrying a lot less inventory than they did last year. That’s fine for now, says analyst Patty Edwards. But she says retailers can’t just cut their way to long-term growth.

I’m Joel Rose for Marketplace.

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