Analysts Hedge Bets On Christmas Some Are Still Optimistic Because Of Healthier Economy

It’s the time of year for making bets: on football, baseball, the election and, if you’re in the retail business, on Christmas.

Store owners and the analysts who track their business are trying to figure out how the big shopping season will turn out. At stake are billions of dollars in sales and profits, because this is the busiest time of the year at stores and malls across the country.

So far, industry analysts are optimistic because of a healthier economy and stronger sales than last year. But they’re nonetheless hedging their bets, because in retailing, there are no guarantees until the last store closes on Dec. 24.

Among the more cautious is Thomas Tashjian, an analyst with Montgomery Securities in San Francisco.

“Christmas will show an average performance,” he said. “Retailers would be very happy coming through the season with total sales of somewhere between a 4 to 6 percent increase.”

“It will be very competitive,” said Walter Loeb, a retailing consultant. “Retailers will have the hook out to bring people into the store.”

More upbeat was Jeffrey Feiner of Salomon Brothers Inc. Strong sales at the end of September - when cold weather returned and women began buying fall clothes - prompted his assessment. “We think that portends a good Christmas.”

But it’s hard to know, because all the old formulas have gone out the window.

Analysts used to be able to predict Christmas by what business was like in August and September.

But “back-to-school (shopping) is no longer the signal it once was,” Feiner said. “That was exemplified last year - back-to-school was pretty good and look how bad Christmas was.”

Looking at the economic statistics also was a good barometer. But while unemployment is down, disposable income is up and inflation is steady, consumers are saddled with more than $1 trillion in debt, much of it credit-card debt. Many aren’t about to start a spree.

Then there are unknowns like the weather - a blizzard or two on the order of last winter’s storms could keep consumers home (although many might resort to catalog shopping) and pinch sales.

And you never know what might happen in the world. John Konarski, a vice president with the International Council of Shopping Centers, a trade group, noted that recent violence in the Middle East, or the possibility of troubles elsewhere, probably wouldn’t affect shoppers’ spirits - unless it looked like the United States could get involved.

Still, the retail business is much healthier than it was last year.

One big change has come in fashion. Women aren’t turning into clothes horses, but they like what they see on the racks for the first time in years.

Apparel sales have picked up at stores like Limited and Penney the past few months, and it’s reasonable to assume that if women like the clothes they’re buying, they’ll also pick up something for relatives and friends.

Konarski noted that consumer confidence is high - a widely followed monthly survey by the Conference Board business research group shows consumers are considerably more upbeat now than last year.

Although consumers are increasingly indebted, Konarski said “we’re very optimistic and we have no reason not to be. Sales are doing very well.”