By and  on November 20, 2006

Black Friday is getting brighter.

Though holiday sales results are ultimately unpredictable and determined by the inevitable last-minute rush to malls, retailers are surprisingly upbeat about the outlook, predicting significant sales gains.

"Everything seems to be very well aligned," said Jane Elfers, chief executive officer of Lord & Taylor. "We are in an apparel cycle right now."

There are plenty of indications they have the wind at their backs: Sales have been strong so far this fall, despite mild temperatures in the Northeast; the stock market is holding up; Wall Street bonuses should be big, and gas prices have declined. These positives should offset continued concerns over softness in the housing market.

Since September, the National Retail Federation has been forecasting a 5 percent gain in total holiday sales to $457.4 billion. According to a survey commissioned by International Council of Shopping Centers Inc. and UBS Securities, 17 percent of consumers said they expected to spend more this holiday season than last year, and 56 percent said they expect to spend the same. Shoppers said they expected to spend $676 on average during their holiday shopping, up from $620 last year.

And, more than ever this year, retailers are moving to direct shoppers to what the stores see as a few key items for gifts. Retail executives are banking on:

  • All manner of sweaters, from long tunics to paper-thin cashmere;

  • Denim, including straight- and skinny-leg styles from J Brand and AG;

  • Leggings to go over the jeans;

  • Jewelry, from charms to watches to high-ticket necklaces;

  • Gift cards, which are likely to be bigger than ever.
But the hottest items around probably won't be apparel. Observers predict that holiday 2006 will once again be all about electronics, from the impossible-to-find PlayStation 3 by Sony to an Apple iPod to Microsoft's new MP3 player, the Zune. Demand for these items could eat into spending on apparel.

Still, L&T anticipates selling 160,000 cashmere sweaters in December, priced $89 and $180, and sees a big season ahead for diamonds, belted wool coats, denim jeans and cold-weather accessories.

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