Holiday Forecast Gloomy

November 3, 2000

Holiday Forecast Gloomy

On the heels of slow third-quarter retail sales, analysts are calling for a moderate-to-weak holiday season. Complicating holiday plans for retailers, the continued record low unemployment rate means "help-wanted" signs will take up window space next to gift merchandise.

On Thursday, Zale Corp. lowered its sales expectations for the Christmas season, citing a tighter retail environment. Zale now projects same-store sales growth of 3%-4%, down from last month's projected growth of 5%-6%.

The slowing economy, rising fuel prices and the stock market's recent volatility are making consumers more cautious, reports Reuters, and they're curtailing spending on luxury and discretionary items. On Tuesday, the Conference Board reported its consumer confidence index fell sharply during October. Federal Reserve officials are concerned the dwindling labor supply combined with rising fuel costs may push up inflation and undermine the U.S. economic expansion.

"Don't count on the consumer," retail analyst Jeffrey Feiner of Lehman Bros. told the Associated Press. "They're not buying. I think the holiday season will be less than stellar."

The one bright light in a gloomy forecast is aimed at specialty retailers, say analysts. "By and large specialty retailers have been siphoning away business from department stores," Kurt Barnard of Barnard's Retail Trend Report told Reuters. "They generally have lower prices and a more direct, targeted appeal to their consumers."

- by Liz Smutko