NEW YORK — How will retailers fare at Christmas this year — will they get a chunk of coal or at least a tiny present under the tree?

An economy in the doldrums, the threat of an Iraqi war and more terrorist attacks and weak comp-store sales already have resulted in markdowns at retail of up to 50 percent. Merrill Lynch and a host of other financial institutions predict this could be the worst Christmas in a decade.

But amidst the flood of economic forecasts that always gets unleashed in November, a trickle of optimism has begun to seep in.

Economists and Wall Street analysts believe that if consumers are shopping earlier, more could get their Christmas lists checked off sooner, and that even with pre-Thanksgiving promoting, there’s a possibility of higher margin selling, particularly if Black Friday weekend is big. Retailers have planned prudently for the soft consumer demand, and made contingencies for the West Coast dock strike, so inventories should hold up. If there are shortages, many are said to be prepared to reorder fast, and even get in some spring goods.

The word from the wise is that the Christmas spirit is far from dead. Some forecasters, sensing that family ties and friendships are becoming more important in the aftermath of Sept. 11, even sound a little mushy. "I believe that among consumers, there’s a sentimentality and that will bring them out buying for Christmas, along with many planned promotions for the November-December that will stimulate sales," said retail analyst Walter Loeb. Still, Loeb projects department stores will be "flat-ish," specialty stores will be 2 or 3 percent ahead, and discounters, up 3 to 4 percent, but he added, "Profits will be much better — in some cases, double the sales gains. Retailers have rationalized their businesses by eliminating people, postponing major expenses and very tight inventory controls, insuring lower markdowns even with reduced sales forecasts."

"It may not be the best of times, but it is better than what people are saying," said Carl E. Steidtmann, chief economist at Deloitte Research, at a Fashion Group International session earlier this month.

The economist said indicators show that consumers’ cash flow is still "quite strong" from three big refinancing booms. And while payroll surveys focus on large businesses, they don’t take into account the small businesses that are the first to hire the unemployed. Household surveys, which capture small business activity, are a better indicator of job market conditions. Although the household survey bottomed in January 2002, it has since added 1.7 million jobs, capturing small-business job creation. In contrast, the payroll survey bottomed in April 2002, and has added only 174,000 jobs since then.Yet any consumer optimism always has caveats. As Paul Dottle, senior vice president, retail industries at American Express, said, "Consumers appear willing to spend money this holiday season, but with an eye towards deals and bargains. Retailers that can deliver the most value to these shoppers will be the winners this year."

"By the end of the season," added Lee Backus, senior vice president, Buckingham Research, "retailers will say it wasn’t a great Christmas but it was better than we thought it was going to be. What usually happens during the Christmas season, and what seems to be particularly true this year, is that expectations are low, though we usually find that the shopper, especially the apparel shopper, shops, but shops later."

Backus said inventories seem relatively in line and "everyone’s got better margins on the sourcing side. If anything, we see better prices. At this point, the dock lockout is pretty much absorbed and built into plans."

Other positive trends: teen specialty retailers, typically a volatile sector, have picked up lately, luxury stores are citing a few robust categories, and the weather is expected to be favorably cold enough to encourage mall traffic. Yet, with all the global economic and political uncertainties this year, the consumer psyche is most difficult to read.

To get a better handle, Taubman Centers commissioned a holiday spending survey of 4,200 people, 18 years of age or older. The survey was conducted by phone from Oct. 28 to Nov. 3 by Marketing Research Services. Among the findings most pertinent to retailers:

Men — especially single men — are procrastinators. Men are more than twice as likely as women to delay shopping until the week of the holiday, with nearly 18 percent of single men waiting to shop until the final week.

Women are 59 percent more likely to complete their holiday shopping by Thanksgiving.

Most people, even singles, want to spend more holiday time with relatives, rather than other singles, with three-quarters of those surveyed saying their most costly gift would go to a relative. However, men were twice as likely as women to say they would buy their most expensive gift for a romantic interest.Men are 16 percent more likely to give money and gift certificates. They’ll outspend women on gifts by 14 percent, spending $959, versus $844 by women.

More than half of the respondents plan to spend at least $500 on gifts; one in 20 said they’d spend more than $2,500.

American Express has a much different set of spending figures based on a telephone survey conducted last month with 800 heads of households. It suggests a 5 percent increase in holiday spending this year, to $1,656 from $1,564 a year ago, but way below the high of $1,684 seen in 2000.

American Express said consumers appear cautious. Seventy-two percent said they will be drawn by deep discounts, 64 percent by special storewide sales events, 57 percent by two-for-one promotions and 19 percent by invitation-only sales events. Only 13 percent said they’d be attracted by special events.

Also, 48 percent used the word "practical" to describe their gift-giving style for the holidays. Apparel and accessories top most holiday lists, cited by 89 percent of shoppers — the same as last year.

Mass merchants, such as Wal-Mart and Target, were cited as the most popular retailers by 79 percent of consumers, close to the 81 percent who chose them in 2001. Other survey results mirrored last year’s findings: 73 percent will visit department stores; 48 percent will visit discounters; 45 percent will go to specialty apparel chains, and 44 percent, sporting goods stores.

A holiday survey by the National Retail Federation indicates 77 percent visiting discounters; 53 percent shopping at department stores; 46 percent surfing the Internet for bargains; 45 percent bargain-hunting at specialty chains, and 37 percent making holiday purchases via catalogs.

Salomon Smith Barney, in a holiday research note issued Wednesday, cited "steadily growing fears of a poor holiday by retailers," but added that consumer balance sheets are strong enough to support spending growth of 2 to 3 percent, on top of the 2.3 percent increase in 2001. Record-low interest rates, attractive financing plans and record refinancing activity should boost purchasing power. While there are negatives such as higher energy prices, slumping consumer confidence and slowing wage growth, the firm concluded that these cross currents offset each other, with the underlying wage growth of 2 to 3 percent ultimately driving spending.Salomon Smith Barney believes the shorter shopping season — 26 days in 2002 versus 32 days last year — could actually benefit retailers. "It seems that the longer the season is, the weaker the sales are, as we believe retailers end with panic and mark down merchandise too quickly," the firm noted. "In our view, consumers are likely to more aggressively hit the stores on Black Friday and in the ensuing week, which could result in a greater amount of high-margin sales."

The analysts indicated that 40 to 45 percent of sales are generated during the 10 days before Christmas. In 2001, the week before Christmas represented 34 percent of holiday sales, up from 30.9 percent in 2000.

For the November-December period, the Salomon Smith Barney Broadlines Index is forecast to rise 1.4 percent versus an increase of 3.4 percent a year ago. Same-store sales are estimated to rise by 3 percent at general merchandisers, compared with 5.3 percent in 2001. Department stores are projected to have a comp-store decrease of 2.4 percent versus the 1 percent dip a year ago.

Department stores, according to a survey by the NPD Group in October, will likely be the venue of choice for men. While 38 percent of men said they’d shop department stores first, 29 percent of women chose department stores. They’re continuing to migrate to discounters. As Lee Scott, president and ceo of Wal-Mart Stores Inc., said about the fourth quarter on a conference call, "Total retail sales are expected to rise, although the increase in spending is less than all of us would like. We expect to get our fair share or hopefully a bit more."

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