NRF predicts lower 2005 retail sales
At its recent conference and expo, the National Retail Federation (NRF) released a guarded forecast for 2005 predicting that GAFS sales will only increase 3.5 percent from last year.
For starters, strong comparisons will make this year more difficult for growth, a statement by the NRF said. Last year GAFS (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) sales rose 9.9 percent in the first quarter, which will make first quarter growth this year hard to achieve, it said. This year, due to tough comparisons, NRF is predicting growth of 3.7 percent for the first quarter.
NRF's retail sales forecast is restrained this year for a variety of other reasons. "This year, consumers will be under increased financial pressure due to higher energy costs and slow wage growth," said NRF Chief Economist Rosalind Wells. "Additionally, past stimuli provided by tax cuts and very low interest rates will no longer be there to boost consumer spending."
Additionally, the labor market will be a telling factor in the level of growth retailers will experience this year. "The consumer has been remarkable in shouldering this economic expansion, but now something has got to give," said Wells. "The labor market will continue to expand this year, though our concern is that modest employment growth will lead to modest income growth, which will put a financial strain on consumers."
Discounters will continue to be challenged as their core consumers are most affected by higher energy costs and slow income growth, the group said. And, as the housing market softens, the furniture and home furnishings sector could begin to experience slower growth.
GAFS sales grew 6.7 percent in 2004, the highest retail sales growth since 1999.
In other news, NRF is broadening the retail categories it tracks, adding food and beverage stores, building materials and garden equipment stores, health and personal care stores, and miscellaneous retailers including florists and gift shops. It will release a revised historical retail analysis and forecast at the beginning of the second quarter.
Finish Line announces cash dividend
Finish Line's (Nasdaq: FINL) board of directors has declared a quarterly cash dividend of $0.025 per share of Class A and Class B common stock. The quarterly cash dividend will be payable on March 15, 2005, to stockholders of record on March 1, 2005.
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