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Retailers Lower Sales Sights

Buffeted by a weaker-than-expected holiday selling season, and troubled by an uncertain economy and the specter of war, retail CEOs and top executives have lowered their sales expectations for the next six months.

That’s the consensus according the latest Retail Executive Survey, a monthly poll of 50 to 55 chief executives and senior managers conducted by the National Retail Federation (NRF) and The Bank of Tokyo-Mitsubishi (BTM).

Specifically, the survey’s Demand Outlook Index for January, which is a six-month-ahead expectation for sales, had a reading of 29.7 percent on a scale of zero percent to 100 percent. A reading of 50 percent means industry conditions are relatively normal, a reading under 50 percent means below normal, and 50 percent or better means above normal.

“Understandably, there seems to be a great deal of uncertainty in the January outlook among retail executives,” said Michael Niemira, senior retail analyst for BTM. “The threats of war and weakness in the economy have created a sense of caution in all industries, and retail is no exception.”

Those factors weighed heavily on merchants last month, as reflected in the survey’s Retail Sector Performance Index (RSPI), an overall summary that measures monthly sales, customer traffic, the average transaction per customer, employment, inventories and the six-month sales outlook (see accompanying table). The RSPI for January dropped to a reading of 31.9 percent from 44.6 percent in December.

One bright spot was the Industry Pricing Index, which is an assessment of retailers’ discounting or pricing power. That metric rose to 29.7 percent, reflecting considerably less discounting than in December when the index stood at an extremely low 16.3 percent. Lean inventories in January helped moderate the degree of discounting necessary to move merchandise, NRF noted.

“This past holiday season was less than ideal for the nation’s retailers,” said NRF president/CEO Tracy Mullin. “We take some consolation in knowing that retailers have done an impressive job of keeping their inventories under control, preparing them for the spring selling season. We expect retailers to continue to keep inventories lean until there is improvement in the economy.”

Retail Execs Assess January ’03

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