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].”
Assouline is paying homage to the late Azzedine Alaïa with a reprint of "Alaïa Livre de Collection.” The book is comprised of photographs of the designer's summer 1992 runway show with models Christy Turlington Burns, Naomi Campbell and Tyra Banks, pictured here at right. #wwdfashion #alaia #tyrabanks
Fall 2018 accessories take on a painterly hue, with Nebulas Blue among Pantone’s top 10 colors of the season. (📸: @jonghyupstudio ; editor: @twallz21 ; stylist and set designer: @haideefindlaylevin ) #wwdaccessories
@americanapparelusa is relaunching the brand outside of the U.S. today, opening its online store to more than 200 countries. The company is also contemplating a return to brick-and-mortar, though details have not been confirmed. In tandem with the expanded distribution is a recasting of a social media ad campagn, called “Back to Basics,” pictured here, with a focus on diversity and a cast of models above the age of 21. Read more on WWD.com #wwdnews #wwdfashion
Exclusive: @britneyspears is continuing to expand her brand. The pop icon, who appears in @kenzo ’s latest campaign, is partnering with Epic Rights to launch a line of branded merchandise. Read @hernameislex ‘s story, link in bio. #wwdnews #britneyspears
The Duchess of Cambridge channeled Princess Diana’s look upon giving birth to Prince Harry, when she and the Duke of Cambridge departed the hospital with the new baby Prince this afternoon in London. #wwdeye #princeofcambridge
The new Prince of Cambridge has arrived! The Duke and Duchess of Cambridge posed with the 8-pound newborn. She wore a look from one of her go-to designers, @jennypackham. Tap link in bio for more. #wwdeye #princeofcambridge
Jewelry label @alisonlou has made a name for itself with fine jewelry that speaks to the Millennial market. Now @twallz21 reports that the label is bringing those playful ideas to a new affordable line of lucite hoops with the launch of Loucite by Alison Lou. Here’s a look from the line modeled by @emrata. #wwdaccessories
@sarahjessicaparker and @gilt are teaming up on a bridal ready-to-wear line. Tomorrow, Parker will launch SJP by Sarah Jessica Parker Bridal — and as part of the launch, Gilt will offer 15 exclusive styles from the SJP by Sarah Jessica Parker footwear collection that were designed to complement the new line. Made out of 10 styles, the line is designed for a variety of occasions, from bridal showers to receptions. Get more details on WWD.com #wwdfashion