Financial Sector: The Year Ahead

Today, in the third installment of a five-part series exploring all segments of the apparel, beauty and retail businesses, WWD tackles the economy and finance — the forces supporting and opposing a recovery, how companies and consumers continue to adjust to the new fiscal landscape, and some of the key firms to watch as the global economy continues to pull itself back from the recession.


See Monday’s look at the retail and fashion categories HERE; Tuesday’s look at the media and entertainment sector HERE; Thursday’s coverage of the emerging markets HERE; and check back on Friday for a look ahead at the beauty industry.

WWD gets the scoop from top industry analysts regarding the financial outlook for companies such as Neiman Marcus, Abercrombie & Fitch, Aeropostale and Zale in the upcoming year.

Most chains got a pass last year as investors contented themselves with leaner and meaner businesses that could turn in better profit margins. But that might no longer be enough. Expenses have been cut to the bone, making earnings growth more dependent on better sales.

Store closures and bankruptcies have combined to send retail vacancies soaring upward and rents spiraling downward for the better part of two years. Observers are betting that stability could begin to return to the retail real estate market in 2010.

With the markets appearing to be more stable and 2010 projected to be a year of slow growth rather than declines, fashion, retail and beauty observers can expect more M&A activity, as well as restructurings focused less on bankruptcies and more on amendments of credit facilities.

Green shoots outnumber weeds as the economy heads into 2010, but the landscape remains fraught with danger signs. Financial executives and observers do expect a gradual recovery throughout 2010, and although retail sales could pick up, they won’t return to prerecessionary levels.

Value retailers found themselves with the right price point at the right time last year and made the most of the recession, expanding sales as the competition floundered.

Congress and the White House have been on the warpath to hold Wall Street accountable for the 2008 financial meltdown and subsequent federal bailout. Retailers have gotten caught in the crossfire.

The shift to thrift ushered in by the recession continues to turn the spending and saving habits of Americans upside down, posing an ongoing challenge to retailers and their suppliers.

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