Holiday outlook

Retailers are bracing for the worst, but it's certain to be better than last year, when holiday shopping coincided with the financial world's near-meltdown (we're approaching the one-year anniversary of the Lehman Brothers bankruptcy). NYT story points out that the sales numbers this fall will only look good when compared with 2008.

In recent months, the steep rate of economic decline has stabilized, and last-minute school shopping in this month will probably lift sales. Yet the numbers should not be interpreted to mean retailing has regained all the ground it lost during the most severe recession of modern times. Retailers are still billions of dollars below the high point of sales that they reached during the boom. While the economy has begun to show signs of improvement, a continuing reluctance to spend on the part of consumers could serve as a major drag on the recovery.

WSJ uses the weak back-to-school results as a potential harbinger for the holidays sales period, the most important stretch in retailing.

Retailers that traditionally rely on back-to-school sales as an barometer of demand for the remainder of the year face tough choices on stocking and hiring. Customers should find ever slimmer pickings and fewer clerks as stores hold off on early holiday orders and further trim costs.

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Store executives said they are going into the season with less inventory, decreasing the breadth and depth of their assortments. They hope to avoid the discounting bloodbath that marked last year's holiday. Many clothing stores, for example, now carry fewer styles, and fewer sizes and colors.

The chain stores announce their August results on Thursday.