SOURCE: Michigan Retailers Association

Michigan Retailers Association

October 28, 2009 11:57 ET

Michigan Retailers' Holiday Forecasts Mixed

LANSING, MI--(Marketwire - October 28, 2009) - Slightly more Michigan retailers expect sales increases than declines this holiday season, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

Overall, however, the average of their sales projections points to a decrease of 1 percent for the season, in line with national projections that range from -3.5 percent to +1 percent.

"There's more optimism this year based on better sales during spring and summer, which is encouraging. But caution remains the word of the day," said MRA President and CEO James P. Hallan.

"While we don't foresee any major sales gains for the retail industry until the state's employment figures begin to show significant improvement, we do believe this will be a better season for many retailers. Our members are certainly working hard to make it better."

The Michigan Retail Index survey for September found that 35 percent of retailers increased sales over the same month last year, while 49 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 42.5, down from 46.6 in August and halting a string of four consecutive monthly increases.

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

Looking ahead, 38 percent of retailers said they expect higher sales during the Fourth Quarter holiday shopping season, while 36 percent project a decrease and 26 percent no change. That puts the seasonally adjusted outlook index at 49.2, down from 53.5 in August.

Many categories of retailers, including electronics retailers, furniture and appliance stores, jewelers and general merchandise retailers expect a better holiday season.

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

September 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 August results)

             % Increased  % Decreased  % No Change    Index*     Responses
Sales           35 (35)      49 (53)      16 (12)   42.5 (46.6)  135 (130)
Inventory       19 (19)      47 (47)      34 (34)   33.2 (36.2)  135 (129)
Prices          19 (26)      13 (11)      68 (63)   52.8 (57.5)  134 (129)
Promotions      36 (33)       7  (8)      57 (59)   62.5 (64.6)  135 (129)
Hiring           7 (11)      17 (11)      76 (78)   44.6 (50.7)  135 (128)

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 August results)

             % Increased  % Decreased  % No Change    Index*     Responses
Sales           38 (43)      36 (35)      26 (22)   49.2 (53.5)  137 (130)
Inventory       20 (22)      36 (39)      44 (39)   44.5 (41.9)  135 (128)
Prices          21 (25)       9  (7)      70 (68)   55.5 (60.2)  135 (128)
Promotions      48 (50)       5  (3)      47 (47)   67.6 (71.7)  135 (129)
Hiring          11 (10)      14 (13)      75 (77)   48.1 (47.5)  132 (129)

September 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           41 (21)      45 (58)      14 (21)
West            36 (53)      45 (19)      19 (28)
Central         30 (45)      45 (20)      25 (35)
East            45 (11)      44 (56)      11 (33)
Southeast       32 (42)      57 (34)      11 (24)

Question of the Month

What is your current expectation for your percentage sales growth or decline over last year for the holiday season?

Average -1%

*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.

Michigan Retailers Holiday Sales Forecasts/Results

Season           Pre-season forecast             Post-season result
            % members          average %      % members       average %
            expecting        sales change     achieving     sales change
          sales increase                   sales increase

2009            38               -1.0
2008            37               -1.2            ***           ***
2007            52               +2.2            **            **
2006            50               +4.5            *             *
2005            51               + 5             39            -1.9
2004            63               + 7             37            0.89
2003            67               + 5             45            0.3
2002            57               + 4             28            -3.2
2001            49               + 6             45            3.3
2000            62               + 9             25            0.0
1999            75               +11             56            + 5.9
1998            74               +10             62            + 8.2
1997            74               +12             63            + 8.1
1996            75               +13             46            + 5.4
1995            78               +12             42            + 1.9
1994            78               +11             68            +12.0

Source: Michigan Retail Index, a joint project of the Michigan Retailers
Association and Federal Reserve Bank of Chicago.

*** 2008: 27.4% greater than 5% sales gain; 17.2% less than or equal to 5%
gain; 7.8% no change;
11.7% percent less than or equal to 5% loss; 35.9% greater than 5% loss.

** 2007: 19.7% greater than 5% sales gain; 14.8% less than or equal to 5%
gain; 16.4% no change;
18 percent less than or equal to 5% loss; 31.1% greater than 5% loss.

* 2006: 23.1% greater than 5% sales gain; 15.9% less than or equal to 5%
gain; 10.4% no change; 16.5% less than or equal to 5% loss; 34.1% greater
than 5% loss.

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