Retailers Ready To Face Challenges

Tuesday, January 16th 2001, 12:00 am

By: News On 6

NEW YORK (AP)â€” Coming off of what many believe was the worst holiday shopping season in at least six years, retailers are expecting their sales slump to continue for the first six months of 2001, before picking up in the second half of the year.

The mood was subdued at the National Retail Federation's annual convention in New York, but merchants tried to put on a happy face, saying the Federal Reserve's interest rate cuts will eventually spark consumer spending.

``We started last year on an incredible high. We ended the year on a low...with the stock market on a roller coaster ride, and with the Internet just another way of doing business,'' Tracy Mullin, president and chief executive officer of the Washington-based retail organization, said Monday.

``This is going to herald a whole new set of challenges,'' Mullin said.

Amid this climate, top management at two major apparel retailers is undergoing some restructuring. Peter Whitford, president of The Limited's Structure division, and Patricia DeRosa, president and chief operating officer, of AnnTaylor Stores Corp., each announced their resignations on Monday. Both companies said they were looking for successors.

The retail federation attempted to downplay the grim holiday news, revealing that total sales for general merchandise, apparel, home furnishings and furniture increased 5.3 percent over the year-ago period, reaching $195 billion. That's slightly less than predictions that holiday sales would be up 6 percent.

In 1999, holiday sales, fueled by millennium spending and a booming economy, rose 7.3 percent over the previous year.

Wall Street analysts believe sales at stores open at least a year, or same-store sales, is the best indicator for retailers' strength. For the combined November and December period, same-store sales on average rose about 2 percent, according to Kurt Barnard, president of Barnard's Retail Trend Report, based in Upper Monclair, N.J.

A handful of major retailers say they're devoting more time and resources to making better hiring decisions. Both John Eyler, president and CEO Toys R Us, and Gordon Segal, CEO at Crate & Barrel, agree that hiring the best in-store clerks available has become even more critical in 2001, when ringing up sales will not be as easy as it was a year ago. The executives said they've begun raising salaries for sales associates to attract the top talent.

Michael Gould, chairman of Bloomingdale's, foresees a difficult season ahead. Sales this winter for apparel targeted at vacationers headed to warm climates were weak, Gould said.

Looking forward, Gould said he does not believe springtime fashions include enough clothing for the more practical shopper.

``There's nothing really wearable,'' he said.

Mullin of the National Retail Federation said retailers need to begin taking chances on new products in order to differentiate themselves from competitors.

``There's this risk averse mentality out there,'' Mullin said, adding that merchants who continue down that road will continue to see their bottom lines suffer.