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Retail CFOs Bearish on 2008 Sales, Expect Mid-2009 Turnaround »
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Retail CFOs Bearish on 2008 Sales, Expect Mid-2009 Turnaround
Nearly half (47%) of retail chief financial officers predict that the economy will experience a meaningful turnaround by July 2009, with the highest concentration (28%) citing the second quarter of next year as the most promising, according to a BDO Seidman, LLP study (via Retailer Daily).
CFOs at leading US retailers consider high fuel costs the primary issue impacting consumer confidence in the first half of 2008 - 57% of them say so, and that’s up 10% from the percentage saying so in first half of 2007, the BDO Seidman Retail Compass Survey found.
More than one-third (36%) cited the weak housing market as having the most impact in the first half of the year.
Regarding the rest of 2008, fewer CFOs (47%) cite fuels costs as likely to be the primary issue affecting consumer confidence; also cited: the housing market (28%), the election (including anticipated tax reform, 13%) and inflation (11%).
Below, some other major findings of the Retail Compass Survey of CFOs.
Overall sales slide
More than six in ten retail CFOs (64%) report flat or decreased sales in 1H08 compared with 1H07. Last year, 18% cited a decrease and 26% reported flat sales in the first half (combined, 44%).
Just 36% of retail CFOs say sales increased in 1H08 compared with 1H07; that’s down from 56% who cited an increase last year.
Comparable store sales sink
Comparable store sales faired worse in the first half of 2008: 44% of CFOs cite a decrease in sales compared with 1H07; last year, 22% reported a first-half decrease. Also, 21% say that comparable store sales were flat in the first half of 2008.
Flat optimism
Looking forward, 36% of the CFOs anticipate that comparable store sales revenue will be higher in the second half of 2008 than in the second half of 2007; 37% say sales will be flat and 27% cite sales will be lower.
Overall, the CFOs estimate that comparable store sales growth for 2008 will be virtually flat, averaging 0.72% growth.
Total revenue growth for the year is estimated to be a higher, at 3.5%, but that is still down from the 5.6% growth estimated last year.
Top 100 retailers
The largest retailers have had a more difficult time this year, with 48% of the CFOs at the top 100 retailers reporting decreased total sales, and 62% reporting decreased comparable store sales, in the first half of 2008 vs. the first half of 2007.
Last year, the top 100 retailers were stronger than the average, with 83% reporting increased sales in the first half of 2007 over 2006.
When asked about their total sales for 2008, half of the top 100 retailer CFOs predict that sales will be lower than they were in 2007; 39% anticipate that sales will be higher; and 11% say sales will be flat.
Top 100 retailers battle fuel costs
Among financial officers at the top 100 retailers, 79% point to fuel costs as the primary issue to impact consumer confidence in the first half of 2008, up from 47% saying so in last year’s survey.
For the remainder of the 2008, 54% of the CFOs at the top 100 retailers cite fuel costs as the top issue, followed by the weak housing market (25%), the election (13%) and inflation (8%).
Last year, when asked the same question, the majority (45%) of the top 100 CFOs cited the weak housing market as the primary issue impacting consumers.
About the study: The BDO Seidman Retail Compass Survey is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm; its executive interviewers spoke directly to chief financial officers using a telephone survey conducted with a random sample of the nation’s largest retailers (revenues of more than $100 million, including 24% of the top 100 based on annual sales revenue). The survey was conducted in August and September 2008.
