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Retailers face uncertainty
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September 13, 2001: 2:16 p.m. ET
Experts, industry unable to gauge consumer reaction to terrorist attacks
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NEW YORK (CNNfn) - Shares of retail companies face a rocky start when markets resume trading, since no one can accurately predict consumer behavior in the weeks and months to come following Tuesday's terrorist attacks on the United States.
Americans already have reduced spending, but whether that becomes a protracted pullback is anyone's guess.
Two polls conducted during the last few days offer contrasting opinions on how consumers will react to the attacks.
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Rescue workers continued to search and clear the rubble from Tuesday's attack on the World Trade Center in New York. (CNN/FILE) | |
Consumers, whose spending fuels two-thirds of the U.S. economy, had been surprisingly resilient up until Tuesday's attack, helping keep an economy slowed by the burst tech bubble, higher fuel prices, rising unemployment, and a volatile stock market from sliding into a recession.
In August, the government reported July retail sales were flat compared with the previous month, better than analysts had anticipated.
Analysts are anticipating a 6 percent increase in third-quarter retail profit compared with a 6.5 percent decline a year earlier, according to earnings tracker First Call. Fourth quarter expectations are for a 22.2 percent increase compared with a 11.7 percent drop a year earlier.
Those numbers have remained unchanged since Monday, largely because attention has been focused on the attacks, First Call's Ken Perkins said.
But the shock of watching two commercial jetliners slam into the landmark twin towers of New York's World Trade Center and into the Pentagon near Washington, D.C., killing thousands, has certainly dampened any immediate enthusiasm for shopping other than for food and other necessities, analysts said.
"For now we have to understand that consumer spending has been in decline for several months for a variety of reason," said Kurt Barnard, president of Barnard's Retail Trend Report. "Now comes this damper. The country right now is going through a period of sadness, grief, sorrow. It's not the kind of mood that spurs buying binges."
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The country right now is going through a period of sadness, grief, sorrow. It's not the kind of mood that spurs buying binges
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Kurt Barnard
President
Barnard's Retail Trend Report |
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Britt Beemer, a consumer pollster with America's Research Group, said his poll of more than 1,000 consumers in the western United States in the last few days indicates few plan to shop for anything besides basics and necessities. Beemer, who was projecting holiday sales to increased 2 percent from year-ago levels before the attack, now anticipates flat-to-negative sales.
"I would say that the first quarter of next year probably has already been doomed by this episode," Beemer said.
Yet, a poll of 4,600 Americans by Harris Interactive released Thursday indicates Americans will not spend less or alter their investment decisions, or alter their behavior other than to curb air travel.
"I think we need to take a step back from the immediate and take a look at the long term. The fact remains that It's uncertain what the impact is going to be in the long term," said Scott Krugman, a spokesman for the National Retail Federation. "We shouldn't underestimate the perseverance of the U.S. economy. I think by saying people are going to be too depressed to buy isn't telling the whole story. I think people understand what's happening in the economy and they know that they need to do their part."
The nation's biggest retailers are trying to assess consumer spending in the coming months, particularly with the upcoming holiday season, the most important of the year. But none is making any predictions.
Home Depot Inc. (HD: Research, Estimates), the nation's biggest home improvement retailer, did not offer an projections on future consumer spending Thursday, but did say it has supplied the rescue efforts at the Pentagon and at the World Trade Center with millions of dollars worth of generators, trucks, power tools, masks, shovels and other equipment. Stores in Washington and New York were closed Tuesday to preserve inventory for the rescue efforts, spokesman John Simley said.
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Tom Williams, a spokesman for Wal-Mart Stores Inc. (WMT: Research, Estimates), the world's biggest retailer, said sales of most items have been running at normal levels, but that sales of some items such as flags, red, white, blue, yellow and black ribbon, gas cans, televisions and TV antennas had increased markedly.
J.C. Penney Inc. (JCP: Research, Estimates) said sales slowed in the immediate aftermath of the attack but that it has been difficult to gauge behavior. Spokeswoman Stephanie Brown said the company has not made any projections about spending for the holiday or beyond.
Sears Roebuck & Co. (S: Research, Estimates) said many of its stores were closed following the attack Tuesday, but is not commenting on sales projections, spokeswoman Peggy Palter said. 
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