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...Retailers have been promoting Black Friday sales much earlier than in prior years, in some cases offering discounts well before Thanksgiving. We believe their strategy, coming on the heels of last year's high and early discounts, carries risks of reducing margins of holiday sales below retailers' (and our) expectations. In general, retailers reduced inventory levels for Holiday 2009. We believe that as of the end of October, inventory at most retailers was at levels appropriate for an expected lackluster selling season with limited merchandise left over from the Fall. Back to school sales went well, and an early bout of cool Fall weather helped clear Fall merchandise in season. Our expectation has been that with appropriate levels of merchandise and stabilizing consumer sentiment, a greater proportion of merchandise could be sold at full margins. (Full margins include a normalized level of discounting, and for categories such as apparel rarely reflect the full "Manufacturers Suggested Retail...

 

The EU and China have an uneasy relationship, and Beijing pulled out of last year's scheduled summit. Europe does not speak with one voice and China would like more consistency. The Lisbon Treaty promises a degree of positive change, in this respect.

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