Archstone Consulting Projects 3-5% Overall Increase in Retail Sales This Holiday Season; Furniture, Appliances, Audio & Video Equipment to Be Season's Biggest Winners

Business Wire, Oct 29, 2004

STAMFORD, Conn. -- With retailers anticipating the start of the 2004 holiday shopping season, Archstone Consulting, a firm focused on delivering independent, strategic advice and operational results, forecasts that retailers will see a 3-5% overall increase in retail sales this holiday season. Discretionary spending categories such as furniture, household appliances and audio/video equipment are expected to see the greatest boost with a forecasted sales increase of 5-7% over last year.

"Barring any catastrophic events, retailers will have reason to celebrate this Holiday Season. Electronic, Apparel and Luxury item retailers can all expect to see significant sales increases. Concerns about the ongoing wars in Iraq and Afghanistan are justified, as our data supports consumption decreases in the fourth quarter during times of military conflict. However consumers, much like markets, don't like uncertainty, and regardless of who is elected in November, a large veil of uncertainty will be lifted, further fueling holiday sales," commented Michael Unger, Director with Archstone Consulting.

Archstone Consulting has identified the following economic factors influencing the firm's assessment of the 2004 holiday shopping season:

Positive Economic Factors Affecting 2004 Holiday Spending

--The Wealth Effect - Record low interest rates over the past few years and heavy "cash-out" refinancing earlier in the year have increased household cash flow and discretionary spending. Like last year, this is driving the tendency to spend more than usual over the coming holiday season.

--Recent Employment Rates Improvement - According to The Economist, the unemployment rate has decreased to 5.4% from 6.1% last year. While there has been a net job loss, the general trend for employment is positive, and this bolsters consumer confidence about the economy.

--Increasing Consumer Confidence - In seven out of nine regions in the US, consumer confidence remains substantially above levels one year ago, according to a recent survey conducted by The Conference Board.

Negative Economic Factors Affecting 2004 Holiday Spending

--Rising Interest Rates - The recent rise in interest rates requires consumers to have incremental income to support an increase in debt, in turn curbing their discretionary spending.

--Increasing Inflation - According to The Economist, consumer prices are increasing by 2.7%, while wages are increasing by only 2.3%. This means consumers will have to pay more for goods with relatively less income.

--Consumers Dislike Political Uncertainty - Between terrorism fears and a Presidential race too close to call, consumers are likely to be particularly cautious in the early fourth quarter.

About the 2004 Holiday Season Projection

Archstone Consulting defines the "holiday shopping season" as sales in November and December. Archstone Consulting's 2004 Holiday Season Projection sales increase was derived according to a thorough analysis of potential predictors including unemployment rate, consumer price index, new homes sold, new housing starts, leisure and hospitality employment, department store inventory price index, producer price index for industrial commodities, price index for gasoline, productivity (non-farm) and the index of consumer sentiment.

About Archstone Consulting

Archstone Consulting is an independent strategy and operations management consultancy. Archstone Consulting specializes in operational transformations and growth platforms in the consumer packaged goods and retail, life sciences, manufacturing, and services sectors. What sets Archstone Consulting apart is the ability to work in concert with clients, offering unbiased advice, efficient execution and measurable results. Headquartered in Stamford, Connecticut, the company has offices in New York, Chicago and San Francisco. For additional information, please visit the company's web site at www.archstoneconsulting.com.