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Retailers Reducing Inventories

The weaker economy has storeowners bracing for lackluster holiday sales.

The nation's top retailers are pairing down inventories ahead of an expected drop in sales this holiday season as a result of the economic slowdown, store officials say.

In a survey of 100 retail executives at companies with annual revenues over $100 million, 75 percent said they're going to be more cautious with inventory purchases in light of a widely anticipated downturn in demand, according to BDO Seidman, a national accounting and consulting firm.

Retailers surveyed said they're expecting sales to drop by 2.8 percent this holiday season as shoppers cut back on spending. In a similar survey last year, retailers projected a five percent increase in sales over the holidays.

“While there is much uncertainty in the retail sector this season, retailers have been consistent in citing reduced inventory purchases as a result of tightened credit and slow spending,” said Al Ferrara, a partner at BDO specializing in retail and consumer products.

Retailers are hoping to boost sales by offering discounts and other deals catering to more cost-conscious shoppers, the survey found. Over 85 percent of respondents said their stores will offer a wider range of discounts this season.

Last updated: Oct 27, 2008

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