Merrill Lynch: Green Christmas Only a Dream

Nov 08, 2002

By George Anderson

Dan Barry, senior retail analyst/broadlines, Merrill Lynch is decidedly less than bullish on the sales prospects for retailers heading into the holiday shopping season.

In a column appearing on the brokerage house’ site, Twelve ‘Nays’ of Christmas: Poor Retail Season Possible, Mr. Barry offers 12 reasons why he doesn’t expect Santa to bring any significant sales gains this year.

Mr. Barry’s “Twelve Nays” are:

“1. Slowing Real Wage and Disposable Income Growth”

Consumers have been known to charge themselves into debt in the past but that isn’t likely this year (see #2).

“2. Plummeting Consumer Confidence”

Consumers are asking, “Have we reached the bottom yet?”

“3. Impending Threat of War in Iraq”

An event thought more likely with Republicans soon to be in control of the legislative and executive branches of government.

“4. Rising Oil Prices”

See #3.

“5. Backed-Up Merchandise at West Coast Ports”

Retailers have already begun using this as an excuse. When expectations are low, commiserate performance usually follows.

“6. Low Financing Rates May Boost Auto Sales”

Instead of finding gifts under the tree, many are going to have to look out in the driveway this year.

“7. No ‘Must-Have’ Fashion”

The Nehru jacket is not expected to make a comeback this year.

“8. Six Fewer Shopping Days”

Merrill Lynch believes that less shopping days to Christmas could reduce seasonal sales by 1.6%.

“9. Declining Payrolls and Increasing Unemployment”

Unemployment checks do not buy many gifts.

“10. Potentially Bloated Inventories”

Move that inventory out – discount, discount, discount.

“11. Stock Market Declines Cause Negative Wealth Effect”

The 201K effect.

“12. The Post-9/11 Sales Surge”

It is going to be difficult to top last year’s performance. Consumers didn’t travel and spent money on house and hearth.

Moderator’s Comment: Do you agree with Merrill Lynch’s
“12 Nays of Christmas” analysis?

Ancient RetailWire wisdom says, “We often get what we
expect. Perhaps, we should expect more of one another.” [George
Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

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