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Retailer Group Predicts Robust Holidays, but Sounds Warning — WSJ

By Sarah Nassauer 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 4, 2019).

Retailers expect a strong holiday shopping season, but warn that global political and economic uncertainty could erode consumer confidence and spending.

The National Retail Federation, which represents retailers including Walmart Inc., Amazon.com Inc. and Macy's Inc., said Thursday it expects holiday sales to rise in a range of 3.8% to 4.2% -- to about $730 billion -- after sales came in lower than expected last year in the midst of a federal government shutdown.

Retailers and consumers are feeling confident amid low unemployment and rising wages, but the economy is growing at a slower pace than last year and there is "considerable uncertainty around issues including trade, interest rates, global risk factors and political rhetoric," said Matthew Shay, president of the retail federation.

The NRF's figures, which cover sales online and in stores from Nov. 1 to Dec. 31 and exclude auto, gasoline and restaurant sales, are in line with those of retail consulting firms.

AlixPartners predicts holiday sales to rise between 4.4% and 5.3% compared with last year. "While our 2019 forecast is an upswing from last year, tariffs and the trade war are finally beginning to take a hit on consumer confidence, and the buzz of an oncoming recession is getting louder," the firm said in a research report.

U.S. stocks are down in October as signs emerge that a manufacturing slowdown has spread to other parts of the economy. Last week, consumer spending, the driving force in the U.S. economy, showed a slight slowdown in August. Federal data released Thursday showed services activity in the U.S. and eurozone softened in September. Investors and economists are watching Friday's planned employment-data report carefully.

The NRF and retailers have long pointed to the trade war between the U.S. and China as a potential source of economic instability, but so far that mostly hasn't translated to higher prices for consumers, Mr. Shay said Thursday on a call with reporters.

The Trump administration has imposed tariffs on the majority of goods imported from China, with some to take effect later in the holiday season on consumer goods including toys and apparel. China also has imposed tariffs on some U.S. goods. Both countries have offered some concessions ahead of high-level negotiations between the countries in October. On Wednesday, the administration said it would impose tariffs on aircraft, food and other goods from the European Union.

"None of these retailers want to pass on cost to consumers if they can avoid it," said the retail federation's Mr. Shay. But if cost increases because of tariffs spread to more categories of goods in the coming weeks and months, he said, "tariffs certainly could make an impact."

Write to Sarah Nassauer at sarah.nassauer@wsj.com

 

(END) Dow Jones Newswires

October 04, 2019 02:47 ET (06:47 GMT)

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