SOURCE: Michigan Retailers Association

February 25, 2009 10:27 ET

Retailers More Optimistic While Bracing for Tough Year

LANSING, MI--(Marketwire - February 25, 2009) - Michigan retailers expect a small decrease in sales this year, following a January in which sales declined for nearly two-thirds of the industry, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

The monthly survey of MRA members found that, on average, retailers expect a decrease of 0.8 percent in their annual sales compared to 2008, despite an increase in optimism for the next three months.

"Coming off a poor January and the worst holiday season in decades, it's no surprise that retailers are lowering expectations for the year. But a small rise in their short-term outlook suggests their projections could turn around quickly as more details of the federal stimulus package become known and the economy gets moving again," said James P. Hallan, MRA president and CEO.

The Michigan Retail Index survey for January found that 23 percent of retailers increased sales over the same month last year, while 64 percent recorded declines and 13 percent saw no change. The results create a seasonally adjusted performance index of 29.0, down from 30.4 in December.

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

Looking ahead, 28 percent of retailers said they expect higher sales during February - April over the same period last year, while 44 percent project a decrease and 28 percent no change. That puts the seasonally adjusted outlook index at 41.6, up from 36.6 in December.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151. Also, regional, local and trade-specific data were not available this month.

Michigan Retail Index

January 2009 results

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

January 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 December results)

            % Increased  % Decreased  % No Change  Index*        Responses
Sales       23 (23)      64 (66)      13 (11)      29.0 (30.4)   168 (135)
Inventory   11 (15)      54 (54)      35 (31)      32.7 (35.7)   167 (135)
Prices      37 (35)      11 (19)      52 (46)      63.2 (58.9)   166 (134)
Promotions  32 (39)      11 (11)      57 (50)      63.0 (61.9)   167 (135)
Hiring       2  (5)      31 (27)      67 (68)      36.9 (39.1)   167 (135)

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 December results)

            % Increased  % Decreased  % No Change  Index*        Responses
Sales       28 (20)      44 (59)      28 (21)      41.6 (36.6)   166 (135)
Inventory   14 (13)      47 (58)      39 (29)      32.3 (32.8)   165 (135)
Prices      32 (37)      11 (14)      57 (49)      61.5 (61.8)   165 (134)
Promotions  43 (43)      11  (9)      46 (48)      63.5 (72.6)   166 (135)
Hiring       7  (3)      26 (27)      67 (70)      41.2 (41.0)   165 (135)

January 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       n.a.         n.a.         n.a.
West        n.a.         n.a.         n.a.
Central     n.a.         n.a.         n.a.
East        n.a.         n.a.         n.a.
Southeast   n.a.         n.a.         n.a.

Question of the Month

What is your current projection for your sales growth in 2009?

Avg. -0.8%

*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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