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US: Decline in retailers' sales fuel recession fears

November 07, 2008 13:38 IST

Major retailers in the US reported declines in sales in October, raising fears of a weak Christmas shopping season and of prolonged economic difficulties.

The only exception was the major discount retail chain Wall Mart which attracted consumers with deep discounts.

Analysts said declining sales across the board from high end to low end stores points to the possibility of prolonged recession with consumers refraining from spending because of weakening job markets with hundreds of thousands losing jobs.

Even those who have jobs are cutting down on spending because of fears of possible lay off as no one is sure how long the economic difficulties would last. 

The heads of three major US automakers met Congressional leaders, including House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, in Washington seeking a bailout, a day before they are expected to announce last quarter losses.

The meetings, which also included Ron Gettelfinger, president of the United Auto Workers union, focused on preliminary discussions about what was at stake if one or more automakers fail, executives with knowledge of the meetings were quoted as saying by CNN.

"The industry needs time and it needs money and it has neither at this point. That's the purpose of meeting," one executive told the network.

Among other things, they were asking for doubling the $25 billion low-interest loan programme approved by the Congress as part of energy legislation, to help automakers convert to making more fuel-efficient
vehicles in an effort to meet the demands of car buyers and new federal rules.

"It is essential that we preserve our manufacturing and technology base in this country," said Pelosi, in a prepared statement released by her office following the meeting. 

"Today, the Democratic leadership discussed how to protect hundreds of thousands of workers and retirees, safeguard the interests of American taxpayers, and use cutting-edge technology to transform blue-collar jobs to green collar jobs for generations to come," she said.

Meanwhile, the New York Times reported that sales at Neiman Marcus, the luxury department store, dropped nearly 28 per cent in October compared with the same month last year.

Sales fell 20 per cent at Abercrombie & Fitch nearly 17 per cent at Saks, 16 per cent at Gap and nearly as much at Nordstrom.

Of the more than two dozen major retailers that reported on Thursday, most witnessed a decline in sales at stores open at least a year, the majority of the decreases in double digits.

"October was every bit as bad we feared," John D Morris, a retailing analyst with Wachovia was quoted by the Times as saying.

"Maybe worse. October's numbers were so disappointing, particularly in the final week, which had to leave retailers in a state of high anxiety going into the holiday season," he said.

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