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].”
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty