Michigan Retailers' Holiday Forecasts Mixed

LANSING, MI -- (Marketwire) -- 10/28/09 -- 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.