A slowdown in the rate of economic recovery is casting another pall over the retail world.
Blake Hallinan, a director in the consumer and retail investment banking group at Bank of America Merrill Lynch, noted that Merrill recently cut its forecasts for GDP growth for the year to 3 percent and, for 2011, 2.5 percent. Many economists last month began shaving growth projections as the rebound has been tamped down by persistently high unemployment, low consumer confidence and fears about Europe’s sovereign debt crisis, among other factors.
Hallinan made his comments during a panel discussion on “Mid-Year Temperature Taking — The State of the Economy and the Impact on Retail Sectors,” hosted by the Luxury Marketing Council earlier this month at the headquarters of Nasdaq.
Despite the pullback in retail results in May, he rated the quickness of the healing process from the lows of fall 2008 as “pretty good.”
The banker’s clients include specialty retailers and athletic apparel chains, and his general outlook for those businesses was positive. “Sales have stabilized,” he said. “Inventory is in line with demand.”
So far he doesn’t foresee any bankruptcies for the balance of the year. “Retailers refinanced last year,” he said. “They healed their balance sheets, there are fewer restructurings and they got cash.”
Joseph Barrato, president of North American operations for Italian luxury firm Moncler, noted that the company, which is planning to go public in Milan “within the next four to five months,” was in a strong position because of the discipline imposed on its operations.
Firms catering to the well-heeled have to have the right price-value ratio, he said: “We have to seduce the consumer. We give them an emotional charge. Price is not a problem if you have the right product.”
Moncler is 48 percent owned by The Carlyle Group.
If Moncler were to be listed, it would join a small but growing group of companies that have done so in recent months. Robert McCooey, senior vice president of new listings and capital markets at The Nasdaq OMX Group noted that value-price specialty chain Rue 21 went public last November, and off-pricer Gordmans filed in May for a $75 million initial public offering for “later this summer,” he said.
However, Fred Nazem, chief executive officer of venture capital partnership Nazem & Co., said he remains cautious and doesn’t believe the economy is in a recovery mode. “There was so much money pumped into the system, but it is not being lent out,” he said
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