Canadian Retailers Anticipate "Lackluster" Holiday Sales

Toronto, Ontario (AHN) - While Canadian retail stores are trying to keep on old price tags in anticipation of weak holiday sales and some have even slashed rates, the establishments are aware of global economic realities and expect lower profits for the fourth quarter of 2008.

A number of Canadian retailers who import items from the U.S. said they planned to hike prices only by early next year since their holiday stock have been with them for the past six or nine months and purchased when the loonie was still almost on par with the U.S. dollar.

But it's another story in 2009, said Terrence Leon, chief executive officer of Leon's Furniture. "In the long run, if the dollar stays low, most products that are imported will go up in price... Generally when business is more difficult, you end up with smaller margin," Leon told the Globe and Mail.

Diane Brisebois, president of the Retail Council of Canada, added, quoted by Globe and Mail, "In this type of economic climate, retailers know that it would be very difficult to raise prices to at least pick up some of the losses... That will have an effect on retail margins, no question about it."

While some Canadian retailers said they could no longer hold off hiking prices, Wal-Mart Canada will not increase through 2009. Sylvain Prud-homme, senior vice president of the discount chain for merchandising, told the Globe and Mail, "In many cases, there is still an unnecessary gap between Canadian and American prices... We intend t continue to close the gap. In fact, last year we found that the price difference was actually greater than the difference in currency."

The fear of a holiday crash for retailers is not without basis. According to the Conference Board of Canada, the confidence level of consumers on the national economy has tumbled down to its lowest level in 26 years.