Tags: Moodys | Lowers | Outlook | Retail | Sector | Slower | Growth

Moody's Lowers Outlook for Retail Sector on Slower Growth

Thursday, 23 Sep 2010 01:05 PM

Moody's Investors Service lowered its outlook for the retail sector to "stable" from "positive," saying the industry's growth will slow in the next year to 18 months on tighter spending by shoppers.

The firm said growth will slow to a "modest" low single digit pace over current levels. Starting this month, the industry will see tougher sales and margin comparisons to the prior year as they have cut all the expenses they can out of their business.

Moody's said it expects the industry's credit conditions will be stable in the next year to 18 months.

Shoppers have been focusing on essentials and cutting back on their spending, prompting retailers to cut prices and run promotions, which hurt margins.

Moody's said that people will keep focusing on value because of high unemployment and debt and tighter credit.

"With that in mind, overall holiday sales and margins will likely be marginally better than last year demonstrating overall low single digit growth," the ratings agency said.

It said of the various sectors, the most stable are drugstores, discounters and auto parts stores, along with home improvement because there's a pent-up demand for repair and replacement.

But department stores and specialty retailers, who have been growing, will see slower growth. Grocery stores will also see flat to small revenue growth because of expanding store numbers and tougher competition.

It said its rating could turn "positive" if the majority of the sector's companies see earnings growth, or "negative" if earnings decline, or if revenue is flat to down.

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Moody's Investors Service lowered its outlook for the retail sector to stable from positive, saying the industry's growth will slow in the next year to 18 months on tighter spending by shoppers. The firm said growth will slow to a modest low single digit pace over...
Moodys,Lowers,Outlook,Retail,Sector,Slower,Growth
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2010-05-23
Thursday, 23 Sep 2010 01:05 PM
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