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Holiday Sales Flat, CE Down: Report

Columbus, Ohio – Fourth-quarter retail
sales will be flat to last year, when holiday revenue fell 4.5 percent, according
to the latest forecast by market research firm Retail Forward.

But sales through the CE specialty
store channel are expected to decline, due in part to the loss of Circuit City,
the firm said.

The projected sales results, based
on core distribution channels and merchandise categories, would rank the coming
holiday season as the second-worst in 42 years.

But not all is gloom and doom.
According to Retail Forward senior economist Frank Badillo, softer sales
declines in August suggest an emerging retail recovery that will be driven by
growing consumer confidence.

“This is positive news as we move
into the critical holiday season, but the economic environment will remain
difficult,” Badillo noted.  “Sales declines will persist for specific
retail channels” – particularly CE, apparel and home goods – “but will end for
aggregate measures of retail sales.”

Included in the company’s forecast
were general merchandise stores such as conventional and discount department
stores, supercenters and warehouse clubs; specialty stores, including consumer
electronics, furniture, home furnishings and apparel chains; home improvement
stores; catalogs; and online sales. Excluded from the forecast were the auto,
food and drug channels.

Consumer electronics stores are
expected to experience the biggest declines, due in part to Circuit City’s
exit, while online sales across all retail channels are forecast to grow 4
percent this holiday season after declining 5 percent a year ago. The broad
group of mass retailers that includes discount department stores, supercenters,
warehouse clubs and small-format value stores is forecast to grow sales 2.5
percent this holiday season, compared with an increase of 2 percent a year ago.

“The emerging recovery will be
driven by growing confidence among households in response to, among other
things, subsiding job cuts by businesses,” Badillo said. “Businesses, in turn,
are taking their foot off the brakes in light of leaner inventories and
expectations that pent up demand and economic stimulus will soon require new
business investment.”

The weak improvement in the sales
growth trend is forecast to gain strength quarter by quarter in 2010, and approach
long-term average growth rates by the end of next year, the firm projected.