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A favorable forecast provides tailwind to Q4 comps


In addition to all the various strategies Walmart has in place to restore same-store sales growth to its U.S. division. A major factor in its favor is that the size of the pie is expected to growth this year.

The National Retail Federation is out with its annual forecast, and according to the trade group, holiday sales are expected to increase 2.8% to $465.6 billion. While that growth is less than the 5.2% increase retailers experienced last year, it is slightly higher than the 10-year average holiday sales increase of 2.6%, according to NRF.

“Retailers are optimistic that a combination of strong promotions and lean inventory levels will help them address consumer caution this holiday season,” said Matthew Shay, president and CEO of NRF. “While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009.”

Though several economic indicators paint a solid picture for the holiday season – including 14 consecutive months of retail sales growth and a substantial reduction in household debt – continued consumer uncertainty over the stock market, higher gas and food prices, fiscal policy and sputtering job growth will impact spending this holiday season, said NRF.

Additionally, the substantial year-over-year gains for the 2010 holiday season will create more difficult comparisons for retailers to achieve this year.

“Just when you think the U.S. economy is turning around, another factor comes into play that changes the game,” said NRF chief economist Jack Kleinhenz, Ph.D. “Persistently high unemployment, an erratic stock market, modest income growth and rising consumer prices are all combining to impact spending this holiday season. How Americans will react to shaky economic data is the question, but the good news for retailers is that shoppers have not yet thrown in the towel.”

In related holiday news, NRF has projected that retailers will hire between 480,000 and 500,000 seasonal workers this season. The association used its holiday forecasting model to create the hiring projection. The resultant numbers are comparable to the 495,000 seasonal employees retailers hired last year.

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