Merry consumer spirits -- complete with freer spending ways -- should make for a more joyful Christmas season for retailers, a senior analyst for Alex. Brown & Sons Inc. said yesterday.
"There will be a pleasant surprise" in this season's sales figures for retailers, said Robert F. Buchanan, the senior retail trade analyst for the Baltimore-based investment banking firm.
Speaking at the company's annual Consumer Growth Stock Seminar, Mr. Buchanan said October retail sales were up 5 percent compared with last year. He expects the Christmas season to see a similar rate of growth.
"Although a host of negatives continue to confront the retail sector -- ranging from overcapacity to high personal debt and low personal savings levels -- current strength in demand is simply too strong for us to ignore," he said in an Oct. 28 report on the retail market.
Mr. Buchanan attributed the upward trend to better weather in September and October and to intangible factors.
This is good news for retailers, which traditionally rely on Christmas sales for much of their profits.
Mr. Buchanan particularly singled out clothing stores the Limited Inc. and the Gap Inc. as two retailers that should increase sales. "The Limited has so many stores, they can't help but to do well," he said. "I think the Gap could have a beautiful Christmas."
The outlook is less promising for Merry-Go-Round Enterprises Inc., the Joppa-based retailer of youth-oriented apparel, and other stores that are dependent on rapidly shifting tastes in fashion. Consumers are still putting off nonessential apparel purchases, he said, and young people have recently shown a preference for more simple, versatile clothing.
In August, Merry-Go-Round's same-store sales dropped 16 percent "amid clear signs of a shift in fashion direction on the part of ethnic customers toward more basic looks," Mr. Buchanan said in a Sept. 2 report he wrote with fellow analyst Maria L. Medaris.
"The environment for young men's apparel sales has been and remains -- in a word -- awful," the report said.
But Mr. Buchanan said Merry-Go-Round is well-positioned to recover from its current slump, "despite its current difficulties and the apparently dampened spirits of at least some of its managers."