PresidentObama and Capitol Hill might have until the end of the year to steer thecountry away from a slate of automatic tax increases and spendingcuts,but Black Friday is just around the corner.
Stores arefinalizing holiday plans and already promoting their doorbuster salesfor the key post-Thanksgiving rush (and, in some cases, Black Thursdayopenings). Now they have to contend with a seemingly endless stream ofnegative headlines about the country’s shaky finances and sharp declineson Wall Street.
TheS&P 500 Retailing Industry Group fell 1.2 percent, or 7.69 points,to 634.90 Wednesday as the Dow Jones Industrial Average dropped 1.5percent, or 185.23 points, to 12,570.95. That leaves the market downnearly 675 points since the election. The decliners included some offashion’s strongest names, such as Tumi Holdings Inc., down 7.2 percentto $19.99; Michael Kors Holdings Ltd., 5.7 percent to $48.11, andLululemon Athletica Inc., 5.6 percent to $65.92.
As America’sfiscal deadline approaches, Europe also continues to struggle throughthe fallout of its own cutbacks. Tens of thousands of workers in theEuropean Union held a series of strikes Wednesday to protest austeritymeasures and widespread unemployment. Spain and Portugal saw the highestturnouts with schools, universities, public transport and air traveldisrupted.
President Obama staked out his fiscal cliff positionat his first press conference since the election and called for anagreement to not raise taxes on 98 percent of Americans and 97 percentof small businesses.
“If we get that in place, we are actuallyremoving half of the fiscal cliff,” he said. “Half of the danger to oureconomy is removed by that single step.”
Alternatively, Republicans have been focusing on eliminating tax loopholes and capping deductions.
Obamalater pressed his case in a closed-door meeting with business leaders,including Mike Duke, president and chief executive officer of Wal-MartStores Inc., and Robert McDonald, president and ceo of Procter &Gamble Co. After the meeting, Duke said Wal-Mart’s customers are thecenter of the fiscal cliff debate.
“They are middle-classAmericans and those aspiring to join the middle class,” Duke said. “Ourcustomers are working hard to adapt to the ‘new normal,’ but theirconfidence is still very fragile. They are shopping for Christmas nowand they don’t need uncertainty over a tax increase.”
The fiscal cliff could also cause shoppers at the other end of the price spectrum to put away their wallets.
“It’ssomething we expect is going to have a little bit more of an impact onthe higher end of the market rather than the lower end,” said FrankBadillo, senior economist at Kantar Retail.
In addition tohaving more of their wealth tied up in the stock market, Badillo saidhigher-end consumers have been hurt by weakness in the job market forskilled professionals. “This is the other shoe falling now with thestock market falling off,” the economist said.
The fiscal cliff could hardly come at a worse time for retailers, which are still picking themselves up after Hurricane Sandy.
“Asthe holiday season is under way, considerable momentum has been lostand the impact of the aftermath of Hurricane Sandy on the holidayshopping season could be sizable, in addition to the negative impact onconsumer confidence due to the political and media attention to the‘fiscal cliff,’” said Chris G. Christopher Jr., senior principaleconomist at IHS Global Insight.
Christopher said IHS hasadjusted its holiday forecast downward, and is now predicting thatretail sales will increase less than 4 percent compared with last year.
“It is obvious that Hurricane Sandy has thrown retail sales off balance,” he said.
Theretail sector began to feel the impact of Sandy in October sales.Seasonally adjusted apparel and specialty store sales fell 0.1 percentto $18.8 billion in October versus September, as department store salesfell 0.3 percent to $14 billion, according to the Commerce Department.Overall retail sales fell 0.3 percent in October, worse than the 0.1percent dip economists projected.
Kevin Regan, senior managing director at FTI Consulting, said the upcoming holiday season would be “OK.”
“Obviously,there is a community that was harder hit than most and they may spendmore on home and car repairs,” Regan said. “But there is a much largercommunity and I think they still view the holidays as positive asevidenced by the consumer confidence [index].”
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews