For retail-industry finance chiefs, it's never too early to start thinking about holiday sales --- which traditionally account for at least $1 of every $5 spent in annual retail activity. And in the latest in a series of midyear surveys of CFOs by accounting firm BDO USA LLP, there's some reason to hope for a better year-end in 2011.
Despite the challenges of the current economy, the survey forecasts a 3% increase in total retail sales for the year, hinging in part on expectations by 51% of those questioned that second-half sales will be higher. In a similarly troubled 2010 --- when 44% of CFOs surveyed by BDO were expecting higher second-half sales --- holiday sales were reported to have risen by 5.7%.
BDO, which has conducted the survey since 2007, said the 3% increase expected for the year was the most optimistic CFOs have been over all five survey years. Still, the professional services firm noted that the actual sales increase that the Commerce Department reported for last year was 4.7%.
The latest survey, conducted in August and September, examined the views of 100 CFOs at U.S. retailers, including many of the largest ones. It found concerns among 77% that weak economic conditions will continue. An economic turnaround in the next year was envisioned by 11%, although that represented a slight rise from the 9% last year who expected a turnaround in 2011.
Short of 'Doom and Gloom'
"Despite low confidence levels, macroeconomic conditions are not weighing on the consumer's wallet as much as expected, and CFOs anticipate moderate spending levels to continue through the holiday season," according to Doug Hart, a BDO partner in the Retail and Consumer Product Practice. Hart added that while retail finance chiefs "may not anticipate a full recovery in the near future," neither are they echoing "gloom and doom in sales expectations."
The survey showed CFOs projecting a 3.5% increase in comparable-store sales in the second half, helping the overall expected 2011 rise grow to 2.3%. Last year's November sales for comparable stores were reported to have risen 6%, with the December rise being 3.1%.
In other areas important to retailers, finance chiefs also had encouraging expectations. All but 4% of the CFOs in the survey saw merger-and-acquisition activity increasing or staying unchanged, for example, after a year that has featured deals involving such retailers as J. Crew, BJ's Wholesale, Jo-Ann Stores, and Drugstore.com in the U.S., and Bulgari in the global arena. The survey showed that 66% expected the U.S. to be the primary scene of M&A activity, with Asia-Pacific seen as the favored area by 18%, and Europe by 16%. CFOs with the largest retailers in the survey indicated they foresaw more activity in the international market, with 75% in that group expecting Europe to host a majority of global M&A.
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