A recent survey by BDO Seidman finds that 69% of chief financial officers (CFOs) a leading U.S. retailers say the American Recovery and Reinvestment Act of 2009 has not been successful in “stemming the recession.”
When it comes to comparing which stimulus package, the American Recovery and Reinvestment Act of 2009 or the Economic Stimulus Act of 2008, had a the most positive impact on consumer confidence, 41% percent say the 2009 package was more effective, while 41% say the 2008 package was better. Seventeen percent said neither package has had a positive impact.
The loss of jobs is the big issue among CFOs, with 62% citing unemployment as the issue having the greatest impact on consumers so far in 2009. Last year, fuel costs (57%) were cited as the primary issue impacting consumers in the first half of 2008, while this year only 2% of CFOs cite fuel costs. For the remainder of 2009, more CFOs (64%) cite unemployment as having the greatest impact on consumer confidence, followed by the housing market (20%), personal credit availability (11%) the 2009 Stimulus Act (4%) and high fuel costs (1%).
• Forty-one percent of CFOs say the economy will experience a meaningful economic turnaround in the second quarter of 2010. The second highest concentration of CFOs (17%) cites that the economy will not turnaround until 2011 or later.
• Looking forward, half (50%) of the CFOs anticipate that comparable store sales revenue will decrease in the second half of 2009 when compared to the second half of 2008, while 26% say sales will be flat and 24% cite sales will be higher. Overall, CFO’s predict that comparable store sales for the second half of 2009 will be down 4% from the second half of 2008.
• A majority (72 %) of retailers cite decreased sales when comparing comparable store sales in the first half of 2009 to the first half of 2008, up from 44% of CFOs that cited a decrease in sales in 2008 when looking back on the first half of 2007 and 22% of CFOs in 2007 who reported a decrease when looking back on the first half of 2006.
• Overall, the CFOs estimate that the average comparable store sales growth for all of 2009 will tumble by 7%. This is the first year that the BDO Seidman Retail Compass Survey of CFOs has predicted a decrease in both comparable store sales and overall sales for the year. Last year, CFOs predicted a 0.7% increase in comparable store sales for 2008.
• Looking forward, half (49%) of the CFOs anticipate that overall store sales revenue will decrease in the second half of 2009 when compared to the second half of 2008, while 23% say sales will be flat and 28% cite sales will be higher. Overall, CFOs predicted that overall store sales for 2009 will be down 5.6% from 2008.
• A large majority (83%) of retail CFOs predict that we will see a meaningful turnaround in the economy in the second quarter of 2010 or later. Forty-one percent expect to see a turnaround in the second quarter of 2010, while 15% cite the third quarter of 2010, 10% cite the fourth quarter of 2010 and 17% don’t expect to see a turnaround until 2011 or later. Last year, the highest concentration (28%) of CFOs predicted a meaningful turnaround in the second quarter of 2009.