Wed, Oct 04, 2006 - Page 12 News List

Retailers hope Q4 will rescue dismal sales year

By Jackie Lin  /  STAFF REPORTER

Retailers are pinning hopes on the fourth quarter, the traditional season for promotional campaigns to earn year-end bonuses, an executive said yesterday.

"It's been a tough year for the retail market," said Kaufmann Wei (魏正元), president of a Taiwanese-French hypermarket venture RT-Mart (大潤發). "Consumer spending is still at rock bottom, with no signs of turnaround."

Speaking on the sideline of a press conference launching the firm's anniversary sales, Wei said the consumer credit crisis had dramatically weakened consumers' purchasing power over the first nine months of the year.

"We don't know whether the fallout from cash-advance and credit card loans has died down. Things should be clearer at the end of the year," he said.

Revenues for RT-Mart's 23 stores nationwide fell more than 1 percent during the first three quarters, the company's figures show.

Wei said he expected fourth-quarter performance to strengthen at least 4 percent from last year, fueled by discount offers and lucky draws at the year-end sales.

At the cost of pricing and margins, the whole-year sales should be able to reach last year's NT$42 billion (US$1.27 billion), he said.

Larger rival Carrefour Taiwan also faces a bumpy road but has maintained its aggressive expansion plan.

It saw sales for the first half of the year shrink by 5.9 percent at stores which have been operating for more than a year.

Carrefour expects that the takeover of Tesco's six outlets will create a synergy when market share and bargaining power strengthen, public relations manager Dream Lin (林夢紹) said.

According to the Ministry of Economic Affairs' latest figures, the retail sector -- including department stores, supermarkets, convenience store chains and hypermarkets -- reported sales of NT$416.4 billion (US$12.6 billion) during the January-to-July period, up 2.19 percent from a year ago.

Hypermarkets reported sales increase of 2.04 percent, boosted by new store openings, while department stores saw revenues drop 2.45 percent over the same period.

"Private spending in department stores will definitely pick up in the fourth quarter as the card loan problem has nearly bottomed out," said Richard Wu (吳昕陽), Shin Kong Mitsukoshi Department Store (新光三越) executive vice president.

However, he predicted that it would take another two years for consumer confidence and purchasing power to fully recover.

Shin Kong Mitsukoshi previously estimated it would take in NT$64.5 billion this year, up 5 percent from last year.

Wu appeared to be hedging his bets yesterday, saying the company would not trim its annual sales target but will try and reach its goal.

The stores' concerns are not groundless. The Directorate General of Budget, Accounting and Statistics said in August that consumption for the whole year might fall by NT$95 billion, of which around NT$30 billion to NT$40 billion would be the result of

consumer loan problems.

Consumer spending grew by a disappointing 1.7 percent in the first half of

the year, and the rate is not expected to increase for the rest of the year,

DGBAS said.

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