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Nov 25, 2009
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Consultant sees US holiday sales down 2 percent

By
Reuters
Published
Nov 25, 2009

NEW YORK (Reuters) - Holiday sales for U.S. retailers are likely to fall 2 percent as sharp declines in personal income and job insecurities keep consumers on the sidelines, according to a report on Tuesday 24 November.



"We all want some good news, but we haven't seen two consecutive declines in same-store sales since the early 1970s," said Robert Duffy, senior managing director at FTI Consulting, and a co-author of FTI's 2009 retail report.

"The recession is going to continue," said Duffy, who advises chief executives on business operations and restructuring alternatives.

Retailers have sharply cut payroll and extra costs. This has helped many survive the U.S. economic downturn. But companies have also cut inventory, which can cause trouble down the line.

"What we're concerned about, is that there's not enough inventory to get to the sales levels you need," said Duffy in an interview in New York. Many small and mid-sized retailers "don't have enough staying power to weather a prolonged storm," he said.

Duffy said more jewelry chains were likely to fail or be bought by larger chains. He declined to name specific companies, citing client confidentiality.

"Unfortunately, deep discounting by merchants and wishful thinking by shoppers will not be able to save the 2009 holiday season," said the FTI report.

The forecast of a 2 percent decline in holiday season sales includes general merchandise, apparel/accessories and furniture, including online sales, from November through January.

There is one bright spot amid the gloom, however. FTI predicts that luxury retailers may perform slightly better than their less-well-heeled peers.

"An exception to these generally low expectations for the season are purveyors of luxury goods, who may be discretely planning for a measurably better season than last year's disaster given Wall Street's big comeback and a renewed feeling among the more affluent that they no longer need to play it so safe and hold back on their large spending habits," according to the report.

The report did not name specific luxury retailers that might benefit the most.

(Reporting by Chelsea Emery; Editing by Tim Dobbyn)

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