Is It Time for Retailers to Throw Caution to the Wind?

— February 14, 2012

While retail sales rose less than expected in January, up only 0.4 percent (including auto sales), I have moved from "cautiously optimistic" to "conditionally optimistic" with respect to retail sales in 2012. As long as consumer confidence continues to rise and unemployment continues to decline, 2012 will see healthier gains than the prior two years.  

It's important to remember when looking at January sales numbers that this is the month where retailers typically clean up and clean out leftover holiday inventory and begin preparations for Spring. January numbers may not be indicative of the growth the industry will experience during 2012, as retailers are still dealing with the excess baggage from the less than stellar holiday season. 

What remains to be seen is: will increases in sales be at the expense of profit margins? Are sales increasing because retailers have relied too heavily on discounting? These answers will be revealed in the next several weeks as major retailers report their earnings. However, if the rumblings on the floor of the MAGIC sourcing trade show and conversations with importers of apparel goods are to be believed, the industry is optimistic about the year ahead.  

Andrew Tananbaum is the executive chairman of Capital Business Credit LLC (CBC), a non-bank commercial finance company specializing in providing creative supply chain financing solutions and working capital for suppliers, importers, wholesalers, distributors and retailers.

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