Holiday Outlook Mixed

December 1, 2000

Holiday Outlook Mixed

Department stores are seeing only modest sales gains as consumer confidence continues to fall. The Conference Board's Consumer Confidence Index fell from 135.8 to 133.5 in November, the lowest level since October 1999. "The nine-point drop in consumer confidence over the last two months underscores an anxiety about future economic conditions," says Lynn Franco, director of the board's Consumer Research Center. However, she says consumers are still confident about current economic conditions, which points to strong holiday spending ahead.

Federated Department Stores and May Department Stores have reported small sales gains for November. Federated's same-store sales increased 1.4% last month, and May's sales rose 2.8%. According to Reuters, Kohl's, Target, Wal-Mart and Sears are expected to report on-target or above-target sales for the month. Nordstrom and Saks are expected to report lower-than-expected sales.

A combination of the slowing economy, stock market volatility and rising fuel prices has forced many retailers to discount merchandise to bring customers into stores, and analysts are expecting the price cuts to continue, the Associated Press reports. Despite strong sales after Thanksgiving, traffic in stores and malls has dropped since the weekend. Retailers may continue to slash prices to attract customers, but this will lower profits for the holiday season.

- by Julia M. Duncan