Stores are haunted by Christmases past

Caution: Hoping for a busy holiday season, retailers are proceeding warily with inventories and hiring.

November 11, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

John A. Challenger, Forecasters predict a rosy holiday shopping season, but retailers are treading cautiously, wary of a trend of sluggish Christmas sales in recent years.

Some of the nation's largest retailers are maintaining slimmer inventories and hiring seasonal workers at the same pace as they did during last year's dismal holiday shopping season when sales increased year over year by 1.5 percent - the lowest in three decades.

"I think most retailers are taking a `wait and see' attitude. They'd love to see increased sales, but they've had too many years of disappointment," said John A. Challenger, president of the Chicago placement firm, Challenger, Gray & Christmas. "Until they see customers ringing their cash registers, they're going to be careful about hiring."

"Most businesses plan by looking in their rearview mirror, and if you look backward it's not very pretty," agreed Carl Steidtmann, chief economist with New-York based Deloitte, a retail consulting firm.

Deloitte predicts retail sales will rise 6.5 percent over last year's holiday season, while the Washington-based National Retail Federation forecasts a more modest 5.7 percent. The holiday season is an important time for many retailers, producing up to 40 percent of their annual sales.

But with the nation's unemployment rate still at 6 percent in October and with companies overall mostly reluctant to hire, retailers aren't counting on much cash-register jingle just yet.

A Target Corp. spokeswoman said the Minneapolis-based retailer's plan to hire 50,000 to 80,000 seasonal workers is consistent with its seasonal hiring last year. The company began hiring for the holidays as early as July and will continue into December. It has also cut back on inventory, however, as many companies were left with goods that didn't sell last year.

"We're planning our inventory conservatively," said Brie Heath, a spokeswoman for Target Corp. "It's just smart to make sure you don't have a lot of inventory left over."

The Limited Brands Inc. began hiring this month and plans to bring on about 75,000 workers, also the same as last year. The Columbus, Ohio-based company, which owns The Limited, Bath and Body Works, Express and Victoria's Secret, tends to hire seasonal workers it has employed in the past and keeps some of them on through January and February for clearance sales.

Other retailers also said they plan to hire about as many workers as last year, from Wal-Mart Corp., the nation's largest retailer, which will hire about 14,000 seasonal workers, to Swedish clothier H&M Hennes & Mauritz ABT, whose stores range from about five to 100 employees depending on location.

The Gap Inc. is one of the few retailers that plans to bring on more workers this holiday season. It expects to hire 20,000 employees, a 30 percent increase from last year at some locations. The San Francisco-based company is also doubling training times to eight hours from four hours for its new seasonal employees.

Gap doesn't predict holiday sales but said it is expecting the momentum it has seen for fall sales to continue this year. Gap sales increased by 4 percent in October and 14 percent in September, the latest numbers available.

Fall sales were driven by a successful ad campaign that featured television spots with the song September by Earth Wind & Fire, and magazine pieces of celebrities wearing the latest Gap styles, which include skinny scarves and stretch boot-cut cords.

"We're not going to be changing our strategy going in," said spokeswoman Jordan Benjamin. "We're expecting an exciting holiday season."

Analysts predict that if sales meet expectations, retailers will hire more workers later in the season. Hiring generally follows profits, Steidtmann said. Also, because of the higher unemployment, they know they can dip into the labor pool later if need be, Challenger said.

A Deloitte survey of 17,000 shoppers found that two-thirds of them planned to spend more or the same as last year. About 70 percent of those planned to shop at discount stores.

"People do have more money in their pockets this year," said Ellen Tolley, a spokeswoman with the National Retail Federation in Washington.

"We're definitely seeing more momentum than we did last year."

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