Retail Execs Upbeat as Holiday Shopping Starts

The annual shopping frenzy kicked off Friday with crowds of shoppers gathering on line, many


braving cold temperature, in the hopes of snagging bargains.

At Woodbury Common, a group of outlet stores in Central Valley, N.Y., there were traffic tie-ups and reports of two-hour long waits for parking. Many of the stores at the outlet had extended their hours, with some opening as early as midnight.

CNBC checked in with several top retail executives and other experts to see how things were shaping up.

Terry Lundgren, Macy's Chairman, President & CEO

At Macy's flagship store in New York City, the crowds were so thick, the store opened earlier than it planned.

"We advertised that we were going to open at 6 o'clock, but the store was so busy at 5:30, we decided to open this one at that time," Lundgren told CNBC. "We had over three thousand people wrapped around the building, ready to get in, so instead of letting them wait out in the cold, we invited them in. I'm glad we did. The store's packed."

"Based on our traffic checkers, we're a little bit up in terms of traffic so far this morning, and every register is is one day, but it's the biggest day of the year for us," he said.

Ed Schmults, FAO Schwarz CEO

FAO Schwarz was even open on Thanksgiving day, and so far the toy retailer is expecting a strong holiday season.

"It was our fourth Thanksgiving in a row that we opened, and we had really strong numbers," said CEO Ed Schmults. "We were up about 32-33 percent over last year, and traffic just about doubled."

"I see some nice acceleration into the holiday season, and we're pretty optimistic we're going to have a strong holiday here," Schmults said.

In response to consumer concerns over toy recalls, FAO Schwarz has provided consumers with more information on the country of origin of its products.

"We tend to focus on the higher-quality items, and also items from smaller, more artisan vendors, so, while not making us immune from it, we think it tends to reduce the probability that we'll be affected," he said.

FAO Schwarz also is benefiting from the weak dollar. It is seeing an increase in traffic in its stores from visitors from outside the U.S.

But closer to home, Schmults expects the U.S. consumer to hang in there this year.

"I think the consumer's going to pull out another successful holiday season. 2008, though, is a very different story. We're being pretty conservative with out projections for '08, due to economic reasons."

Gerald Storch, Toys R Us Chairman & CEO

Toys R Us also is reporting that the recalls of Chinese-made toys earlier this year are not putting a damper on holiday sales.

"We've seen at Toys R Us that in good economic times or bad, parents want to buy toys for their children," said Chairman and CEO Gerald Storch. "It's the last present a parent cuts."

"What we're hearing from parents is, they're pretty smart, and they know, with the level of testing this year, and with all the scrutiny, this will be among the safest of holiday seasons," he said. "With our vendors, we have told them, in no uncertain terms, we will not tolerate unsafe products in our stores."

What's hot this holiday season? Storch cites, Hannah Montana dolls and other merchandise and Nintendo's Wii, among others.

"Hannah Montana, in particular, appears to be as hot as the Beatles were for my generation...these Hannah Montana dolls are just flying out of here," he said.

As for the Wii, Storch said the retailer sells as many as it gets in the store.

"We're getting multiple shipments throughout the holiday season," he said. "We will have more than we had last year, but they still sell out."

Lori Zumwinkle, Best Buy Vice President, Customer of Sales

Best Buy is seeing a "ton of traffic" at its stores on Black Friday, according to Lori Zumwinkle, vice president of customers sales at Best Buy.

"Consumer electronics is one the number one items on holiday gift lists this year," Zumwinkle said.

Speaking from a Best Buy store in Eden Prairie, Minn., Zumwinkle said she was seeing a lot of demand for notebook computers, plasma TVs and the Guitar Hero video game bundled with Microsoft's Xbox 360 video game console.

One deal Best Buy had was a Sony notebook sold with a mouse, a printer, technical support services for $499.

"Everything we're seeing, we're really encouraged," she said.

Christine Augustine, Bear Stearns Retail Analyst

Strong sales on Black Friday could provide a "psychological" lift to the retail sector, according to Bear Stearns analyst Christine Augustine.

She said she wouldn't be surprised if retail stocks trade higher over the next week or so.

According to Augustine, there is a lot of pent-up demand for products after two months of really weak chain-store sales.

"What we know now is consumers want electronics, and they are willing to go at midnight, or 3 am, or 5 am and fill the parking lots to get that GPS system for 50% off," she said. "So we are expecting electronics to be hot this season....This is a great kickoff."

However, Augustine will be watching to see if consumers continue to shop after Friday's door-buster deals are done.

"I think we may see traffic slow down," she said.

One factor: This year the shopping season is longer than usual, with 32 shopping days between Thanksgiving and Christmas, and consumers may procrastinate.

Scott Krugman, National Retail Federation Vice President

The National Retail Federation, an industry trade group, is expecting this holiday shopping season to see the slowest sales growth since 2002.

Their forecast calls for sales to rise 4.0% to $474.5 billion. Although the pace is slower than last year's 4.6% gain, the level is still healthy, according to Krugman.

"Clearly, consumers are going to be a little bit more challenged this year, but we think the consumer is going to pull through," Krugman.

Earlier this week, the group said it expects 55.1 million people to definitely shop this weekend, while 77.8 million others they may shop.