Families Planning to Spend Less on Gifts, Poll Finds
In a fresh sign of the American consumer’s miserly mood, a leading research group reported Wednesday that the typical U.S. family plans to spend about $325 on gifts this Christmas, $10 less than a year ago.
The decline in holiday spending projected by the Conference Board was the first since the New York-based business research organization began polling consumers this way in 1987. It also came amid new indications of weakness in the retailing industry.
The Conference Board report was based on a consumer confidence survey conducted in the first two weeks of November of 5,000 families across the country. Fabian Linden, executive director of the Conference Board’s consumer research center, hedged the findings by suggesting that confidence could rebound in the weeks before Christmas.
When Christmas nears, Linden said, “there’s a certain emotional electricity that gets excited, and it might offset the dreariness” and spur buying by shoppers. At the same time, he said, the survey’s projections have been within roughly a percentage point of the actual results over the past three years.
Retailers this Christmas “won’t be dancing in the aisles, that’s for sure,” Linden said.
Last year, the Conference Board projected a gain of roughly 4.5% in holiday spending, and the gain actually turned out to be 4.7%, Linden said.
In the West, the Conference Board survey found that families are planning to spend $315 on Christmas gifts, the same as last year. Everywhere else, however, families said they expect to spend less: In the Northeast, the projection for the median family was $357, down 7%; in the Midwest, this year’s figure was $315, down 5%, and in the South, the projection was $311, down 3%.
Overall, the poll predicts spending will total $37 billion, a drop of nearly 4%. The decline would be even greater if inflation was taken into account because consumer prices have risen nearly 5% over the past year.
Some other surveys, including a report released by the U.S. Chamber of Commerce Wednesday, have predicted that holiday spending would be up 5% to 6% before subtracting inflation. But the Conference Board’s report is one of the most closely watched spending polls, partly because of the large number of families surveyed.
On Tuesday, the Conference Board released the other findings of its consumer confidence survey. It reported that consumer attitudes about the U.S. economy have fallen this month and are close to the depths reached in the 1982 recession. That outlook, and Americans’ gift-buying plans, were attributed to the Persian Gulf crisis, pending federal tax increases and the slumping economy.
The survey was released following the disclosure of other dismal news in the retailing industry. Sources on Wednesday confirmed news reports that heavily indebted R. H. Macy & Co. suffered a loss of $66 million in its first quarter ended Oct. 31, double its deficit of a year earlier.
In a private memo to potential investors and credit advisers, Macy’s also said its sales fell 9.5% to $1.55 billion in the quarter. A spokeswoman for Macy’s--which owns California’s Bullock’s and I. Magnin stores, along with its namesake chain--declined to comment.
Although the results were regarded by some analysts as worse than expected, major credit agencies said they would continue to advise their clients to ship merchandise to Macy’s stores.
Macy’s payments to suppliers “are still excellent. They are still on time,” said Murray Maxwell, executive vice president at Bernard Sands Credit Consultants in New York.
Analysts said, however, that Macy’s performance this Christmas season will be crucial in determining whether the company can avoid joining the parade of big retailers that have sought bankruptcy court protection.
Other big retailers have reported mixed sales results since the traditional holiday shopping season began last weekend. Sears, Roebuck & Co., generally regarded as the nation’s biggest retailer, said it was “disappointed” by its Thanksgiving weekend performance.
Another big merchant, J. C. Penney & Co.--whose sales have fallen every month since August--said Wednesday that it was “encouraged” by last week’s sales volume. Even so, a spokesman for the Dallas-based company said he wasn’t sure whether sales were up at stores open for more than a year.
Los Angeles-based Carter Hawley Hale Stores, parent of the Broadway-Southern California and other department store chains, said its sales were off last weekend but didn’t disclose the size of the decline. A company spokesman, Bill Dombrowski, cited the general weakness in retailing.
The company, saddled with $350 million in junk bond debt, has struggled to avert a takeover since overhauling itself in 1987. This month, two major East Coast credit agencies, Bernard Sands and Credit Exchange Inc., began advising suppliers not to ship merchandise to Carter Hawley stores because of a pattern of late payments by the retailer.
The credit agencies said, however, that the planned sale of Carter Hawley’s Southeastern chain, Thalhimers, to May Department Stores for $325 million should help clear up the problem. Carter Hawley said it expects to complete the deal this month.
Dombrowski said the posture by the credit agencies hasn’t had any practical effect. He said Carter Hawley already has nearly all of its Christmas merchandise and that few of its suppliers rely on Bernard Sands or the Credit Exchange in making their credit decisions.
Company officials also have denied being slow in paying bills, blaming the complaints on a handful of their 15,000 suppliers.
SPENDING ON CHRISTMAS
Figures are median planned household expenditures on Christmas gifts for 1990.
SPENDING BY REGION National total: $325 NORTHEAST: $357 MIDWEST: $315 SOUTH: $311 WEST: $315 SPENDING BY HOUSEHOLD INCOME Less than $15,000: $158 $15,000 - $25,000: $271 $25,000 - $35,000: $359 $35,000 - $50,000: $405 $50,000 and above: $488 Source: Conference Board
