By Evan Clark and David Moin
with contributions from Kali Hays
 on September 7, 2017
Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.Mandatory Credit: Photo by AP/REX/Shutterstock (8871393a)Carley Davis from Flint, Michigan does some shopping during Macy's Backstage grand opening at the Fairlane Town Center, in Dearborn, Mich. Macy's is opening Macy's Backstage stores, within a store, across the country designed for the savvy and cost conscious shopperMacy's Backstage Fairlane Town Center Grand Opening, Dearborn, USA - 17 Jun 2017

Hope remains, but a little more air is coming out of the 2017 fashion forecast.

After some hint of rebound in second-quarter results — with signs of some momentum and slightly better foot traffic — the retail outlook remains plenty cautious for the second half.

The National Retail Federation cut its 2017 sales projection Wednesday given revisions to government statistics and weakness earlier in the year and executives speaking to investors at Goldman Sachs’ 24th annual global retailing conference in New York generally hedged on the future.

The NRF cut its 2017 retail sales forecast to an increase of 3.2 percent to 3.8 percent, down from the 3.7 percent to 4.2 percent rise previously projected.

“Meaningful revisions to retail sales numbers by the Census Bureau and similar revisions to personal income and consumption by the Bureau of Economic Analysis have both affected our forecast and have required us to adjust our 2017 sales projection,” said Jack Kleinhenz, the NRF’s chief economist. “While weaker-than-expected spending in the first quarter along with decelerating inflation has also contributed to the revision, NRF anticipates stronger sales heading into the fall and holiday seasons.”

The impact from Hurricanes Harvey and Irma did not play into the weaker forecast but the impact of the storms could still be felt. “It’s too soon to evaluate the impact they might have in retail spending,” Kleinhenz said.

Weather tracking firm Planalytics projected that Harvey and Irma combined could lead to $2.45 billion in lost retail sales.

Sales growth in 2017 is expected to largely come from companies such as Amazon, TJX Cos. Inc. and Home Depot, while department stores and fashion specialty stores muddle along.

At the Goldman conference, Frank Conforti, chief financial officer of Urban Outfitters Inc., said both the company’s namesake chain and Anthropologie were improving, but that third-quarter comparable retail sales were running down by low-single digits.

And even the near future is a murky.

“I don’t think holiday itself has performed as anybody has expected over the last several years,” Conforti said.

“For us how we’re planning our business is the environment itself,” he said. “It will be relatively consistent with what we’ve seen. If you’re getting it right from a fashion perspective and from an execution perspective, she is willing to pay for you product and she is willing to pay regular price. If you’re wrong, she is going to look for deal and there’s a lot of price sensitivity that’s out there.”

Conforti said it’s become difficult to predict how much of future business will come through e-commerce and how much will come through stores, making it harder to plan.

“[For] the next three years, I think we continue to believe that traffic itself will be challenged, and there’ll continue to be higher rate of demand online,” he said.

L Brands Inc. has been working on a turnaround, having seen its Victoria’s Secret sales decline for eight consecutive months. Company executives at the conference said things are looking up for the second half of the year, as Victoria’s Secret returns to a focus on constructed bras and cuts back on promotions and the constantly cited negative impact from the exit of apparel and swim wanes.

But L Brands’ major focus for the rest of the year, as well as the foreseeable future, is China, where Martin Waters, L Brands’ president of international, sees the most potential for growth.

Briefly discussing L Brands’ recent decision to buy back the rights to Victoria’s Secret in the country, Waters said. “China will be the biggest market on the planet.” By the end of this fiscal year, Victoria’s Secret will have 36 stores in 13 cities in China, and although it’s L Brand’s smallest market now, it has “the most potential,” according to Waters.

As for the U.S., even though Waters said Victoria’s Secret has seen “a difficult period, no question,” it’s still the benchmark for L Brands’ future plans and the company won’t be abandoning it or its stores anytime soon.

“For the naysayers…who think that retail is dead and having a base of stores is a millstone around your neck, I would tell you that we have about 2,700 stores in North America and about 32 stores of them are negative on a cash basis,” Waters said. “We’re not at all negative about the retail landscape, quite the opposite is true. We remain incredibly optimistic and we think that with the right brands, with the right emotional content, we can continue to grow this business.”

Earlier at the conference, PVH Corp.’s chief executive officer Emanuel Chirico said “trends in the business are better,” but acknowledged that the company was planning for more of the same for the second half, with trends from the first six months carrying though to the holiday season.

“It will be as promotional as last year,” Chirico said. “We don’t have a Pollyanna kind of projection, and I just don’t think that’s where it will be. I will say that open to buy dollars for the second half of the year in the department store channel have been shrunk pretty considerably, I’d say depending on the category anywhere from 3 percent to 10 percent. That will be healthy for gross margins as we get into the fourth quarter, particularly if these trends that we’re seeing in the business continue.”

Jeffrey Gennette, the new ceo at Macy’s Inc., was more bullish.

“I think the fourth quarter is where Macy’s really shines,” Gennette said. “When you look at our penetration in the fourth quarter versus most other retailers, it is a place where customers do come to. So when you look at our digital business, when you look at what we’re doing in our stores, in our new marketing campaigns, our new loyalty program, we feel good about the fourth quarter.”

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