Majority of Retail CFOs Say 2009 Economic Stimulus Act Unsuccessful in Stemming Recession According to BDO Seidman, LLP Study

CHICAGO-(Business Wire)-September 14, 2009 - According to a recent study by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, 69 percent of chief financial officers (CFOs) at leading U.S. retailers say that the American Recovery and Reinvestment Act of 2009 has not been successful in stemming the recession. When it comes to comparing which stimulus package, the American Recovery and Reinvestment Act of 2009 or the Economic Stimulus Act of 2008, had a the most positive impact on consumer confidence, CFOs are torn. Forty-one percent say the 2009 package was more effective, while 41 percent say the 2008 package was better. Seventeen percent say that neither package has had a positive impact.

Unfortunately unemployment is top of mind this year, with 62 percent of CFOs citing it as the issue having the greatest impact on consumers so far in 2009. Last year, fuel costs (57%) were cited as the primary issue impacting consumers in the first half of 2008, while this year only two percent of CFOs cite fuel costs. Looking forward to the balance of 2009, more CFOs (64%) cite unemployment as having the greatest impact on consumer confidence, followed by the housing market (20%), personal credit availability (11%) the 2009 Stimulus Act (4%) and high fuel costs (1%).

In regards to the recession, 41 percent of CFOs are predicting that the economy will experience a meaningful economic turnaround in the second quarter of 2010. The second highest concentration of CFOs (17%) cites that the economy will not turnaround until 2011 or later.

“Retailers have their work cut out for them for the remainder of 2009 and through the beginning of next year, but there is a light at the end of the tunnel,” said Doug Hart, a partner in the Retail and Consumer Products Practice at BDO Seidman. “In fact, most retailers anticipate a meaningful turnaround in the economy to start in the second quarter of 2010. However, until retailers begin experiencing true sales increases, they will likely proceed cautiously, continuing to focus on cost-cutting and inventory management.”

These findings are from the most recent edition of the BDO Seidman Retail Compass Survey of CFOs which examined the opinions of 100 chief financial officers at leading retailers located throughout the country. The retailers in the study were among the largest in the country, with revenues ranging from $100 million to $100 billion, including 10 percent of the top 100 based on annual sales revenue. The survey was conducted in August and September of 2009.

Some of the major findings of BDO Seidman Retail Compass Survey of CFOs:

Battle of the Stimulus Packages. The 2009 stimulus package is credited for helping to avoid a depression, but with a $787 billion price tag and little direct consumer stimulus. The Stimulus Act of 2008 included a series of rebate checks to qualified taxpayers and helped boost comparable store sales in May, June and July of 2008 (positive 3.0 percent, 4.3 percent and 2.6 percent, respectively). Still, retailers are torn about which package has provided the most relief. When asked which one had a more positive impact on consumer confidence, 41 percent of retailers chose the 2008 package while 41 percent chose the 2009 package, 17 percent said that neither package had much of an impact and one percent said they had equal impact.
Retailers Less Pessimistic about Second Half of 2009. Looking forward, half (50%) of the CFOs anticipate that comparable store sales revenue will decrease in the second half of 2009 when compared to the second half of 2008, while 26 percent say sales will be flat and 24 percent cite sales will be higher. Overall, CFO’s predict that comparable store sales for the second half of 2009 will be down four percent from the second half of 2008.
Comparable Store Sales Dismal in First Half of 2009. A strong majority (72 %) of retailers cite decreased sales when comparing comparable store sales in the first half of 2009 to the first half of 2008, up from 44 percent of CFOs that cited a decrease in sales in 2008 when looking back on the first half of 2007 and 22 percent of CFOs in 2007 who reported a decrease when looking back on the first half of 2006. Sixteen percent say that comparable store sales were flat in the first half of 2009.
Comparable Store Sales Expected to Tumble in 2009. Overall, the CFOs estimate that the average comparable store sales growth for all of 2009 will tumble by seven percent. This is the first year that the BDO Seidman Retail Compass Survey of CFOs has predicted a decrease in both comparable store sales and overall sales for the year. Last year, CFOs predicted a 0.7 increase in comparable store sales for 2008.
Overall Sales Plummet in First Half of 2009. When comparing sales revenue in the first half of 2009 to the first half of 2008, the majority (86%) of retail CFOs report flat (20%) or decreased (66%) sales, up from 64 percent last year and 44 percent in 2007. Only 14 percent of retail CFOs say sales increased when comparing the first halves of 2009 and 2008, which is down from 36 percent who cited an increase last year when comparing sales revenue to the first half of 2007. In 2007, 56 CFOs cited an increase when comparing sales revenue to the first half of 2006.
Bleak Overall Sales Outlook. Looking forward, half (49%) of the CFOs anticipate that overall store sales revenue will decrease in the second half of 2009 when compared to the second half of 2008, while 23 percent say sales will be flat and 28 percent cite sales will be higher. Overall, CFOs predicted that overall store sales for 2009 will be down 5.6 percent from 2008.
Turnaround Predictions. A large majority (83%) of retail CFOs predict that we will see a meaningful turnaround in the economy in the second quarter of 2010 or later. Forty-one percent expect to see a turnaround in the second quarter of 2010, while 15 percent cite the third quarter of 2010, 10 percent cite the fourth quarter of 2010 and 17 percent don’t expect to see a turnaround until 2011 or later. Last year, the highest concentration (28%) of CFOs predicted a meaningful turnaround in the second quarter of 2009.

The BDO Seidman Retail Compass Survey of CFOs is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief financial officers, using a telephone survey conducted within a scientifically-developed, pure random sample of the nation's largest retailers (with revenues ranging from over $100 million to billions of dollars).

BDO Seidman, LLP has been a valued business advisor to retail and consumer products companies for almost 100 years. The firm works with a wide variety of retail clients, ranging from multinational Fortune 500 corporations to more entrepreneurial businesses, on a myriad of accounting, tax and other financial issues.

About BDO Seidman, LLP

BDO Seidman, LLP is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Guided by core values including, competence, honesty and integrity, professionalism, dedication, responsibility and accountability for almost 100 years, BDO Seidman provides quality service and leadership through the active involvement of our most experienced and committed professionals.

BDO Seidman serves clients through 37 offices and more than 400 independent alliance firm locations nationwide. As a Member Firm of BDO International, BDO Seidman, LLP serves multi-national clients by leveraging a global network of 1,095 offices in 110 countries. BDO International is a worldwide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country.

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