SOURCE: Michigan Retailers Association

Michigan Retailers Association

January 27, 2010 11:41 ET

Michigan Retailers See Better Start to 2010, Following Improved Holiday Season

LANSING, MI--(Marketwire - January 27, 2010) - Michigan retailers' outlook for the 1st Quarter of 2010 rose to its highest level in three years, following a stronger December sales performance, according to the latest Michigan Retail Index survey. The survey is a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

The entire holiday shopping season also was an improvement over the previous year, although a weaker November kept overall holiday gains in check.

"December lived up to our expectations and boosted retailers' outlook for the start of 2010," said MRA President and CEO James P. Hallan. "For the first time in several years, more retailers reported holiday gains than declines."

The Index survey of MRA members showed that 43 percent reported holiday sales increases from the previous year, while 17 percent reported no change and 39 percent reported declines. For 2008, 45 percent reported gains and 48 percent reported declines.

The Michigan Retail Index survey for December alone found that 40 percent of retailers increased sales over the same month last year, while 44 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 47.8, up from 39.7 in November and 41.4 in October. A year ago, the index had dropped to 30.4 in December and 28.8 in November.

Index values above 50 generally indicate an increase in positive activity, while values below 50 indicate a decrease.

Looking ahead, 42 percent of retailers expect sales during the 1st Quarter of 2010 to improve over the same period last year, while 28 percent project a decrease and 30 percent no change. That puts the seasonally adjusted outlook index at 57.1, up from 56.7 in November and 48.9 in October. A year ago the index had fallen to 36.6 in December and 34.1 in November.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.

Michigan Retail Index
December 2009 results
Index figures dating to July 1994 are available at
www.retailers.com/news/retailindex.html

December Performance
Retailers reporting increased, decreased or unchanged sales, inventory,
prices, promotions and hiring compared to the same month a year ago
(numbers in parentheses indicate November results)
        % Increased  % Decreased  % No Change Index*  Responses
Sales        40 (33)      44 (54)            16 (13)  47.8 (39.7) 136 (133)
Inventory    16 (21)      52 (43)            32 (36)  31.6 (37.2) 136 (132)
Prices       21 (27)      12 (14)            67 (59)  54.4 (56.9) 135 (131)
Promotions   47 (43)       5 ( 8)            48 (49)  71.1 (64.1) 135 (132)
Hiring       5  ( 5)      17 (21)            78 (74)  44.1 (42.8) 136 (132)

Outlook for Next 3 Months
Retailers expecting increased, decreased or unchanged sales, inventory,
prices, promotions and hiring compared to the same period a year ago
(numbers in parentheses indicate November results)
        % Increased  % Decreased  % No Change Index*  Responses
Sales        42 (36)      28 (38)            30 (26)  57.1 (56.7) 134 (130)
Inventory    25 (20)      29 (38)            46 (42)  48.1 (52.5) 135 (128)
Prices       33 (28)       9 (10)            58 (62)  61.9 (58.6) 135 (127)
Promotions   39 (39)       5 ( 5)            56 (56)  67.4 (75.0) 135 (129)
Hiring        8 ( 5)      14 (15)            78 (80)  47.0 (49.8) 134 (129)

December Sales Performance & Outlook for Next 3 Months, by Region
(the first number indicates sales performance for the month; the number in
parentheses indicates outlook for the next three months.)
        % Increased  % Decreased  % No Change
North        28 (39)      53 (36)            19 (25)
West         50 (47)      37 (22)            13 (31)
Central      45 (53)      33 (12)            22 (35)
East         20 (30)      70 ( 0)            10 (70)
Southeast    44 (40)      39 (37)            17 (23)

Question of the Month
For sales this past holiday season, what was the percentage increase or
decrease from the previous season?
> 5% gain    < /= 5% gain    0%      < /= 5% loss   > 5% loss
 26%          17%            17%      24%            15%

For all of 2009, what was the percentage increase or decrease from the
previous year?
> 5% gain    < /= 5% gain    0%      < /= 5% loss   > 5% loss
 16%          10%            12%      43%            19%

*Seasonally adjusted diffusion index. A diffusion index, which is the sum of the percent of respondents indicating increase and half the percent indicating no change, is calculated and then seasonally adjusted using the U.S. Census Bureau's X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.

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