Holiday Retail Sales Could Be Strong, Analysts Say

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If retailers were to draw up a nightmare scenario for the holiday shopping season, it might include a hurricane, flooding, war and soaring gas prices.


That’s no nightmare, but today’s unpleasant reality. And just to affirm the nervousness, a Field Poll released last week found that among those Californians making less than $40,000 a year, 54 percent said they were cutting back on spending for food, clothing and dining out because of having to pay more at the pump.


But some local retailers and analysts remain cautiously optimistic that the worst will pass before Christmas and people will once again be in a shopping mood.


“The expectation is that the holiday season of ’05 is going to be just as good, if not better, than ’04,” said Al Frank, partner in charge of the consumer business practice at Deloitte & Touche LLP.


Frank predicts that retail sales will be up 3 percent to 4 percent, based on the belief that many of today’s problems are temporary and mostly localized to the Gulf Coast states. He also cites still low unemployment, strong August same-store retail sales and a decent back-to-school shopping season, all things considered.


If Frank is on target, merchants should be satisfied, though not necessarily thrilled with retail’s most important time of the year. Last year, fourth-quarter retail sales jumped 6.5 percent for the second year in a row, according to Retail Forward Inc. and the U.S. Department of Commerce.


Of course, it’s still early. With more than two months before the holiday shopping season really gets going, many retailers and analysts are holding back from making pronouncements until they get a better read on the climate.


The National Retail Federation doesn’t plan to release its forecast until late September, though it is closely monitoring retail sales as gas prices rise. “It is too soon right now to come up with a holiday forecast for the entire season,” said spokeswoman Ellen Tolley Davis.



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from the Sept. 5 edition of the Business Journal
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