Retail CFOs Cautiously Optimistic for Year-End Results

We’ve seen plenty of dim economic news over the past few weeks: markets are volatile, consumer confidence levels are low, unemployment is stagnated around 9.1% and August retail sales were mixed.

Still, 100 retail CFOs who were surveyed in the rollercoaster months of August and September, forecast a solid 3% increase in total 2011 sales. For the second of half of 2011 — including the all-important holiday season — CFOs expect a 3.5% increase in comparable store sales.

It’s clear that we’re seeing a disconnect between consumer confidence reports and the way consumers are actually behaving.

This is the fifth year of our Retail Compass Survey of CFOs, which examines the opinions of 100 retail CFOs to glean their insights on the economy, sales results and M&A activity. While CFOs reported the most optimistic sales outlook since 2007, they still point to many obstacles blocking a full recovery. Most (77%) expect a continuation of stagnant economic conditions, and just 11 percent expect to see an economic turnaround in the next year, up only slightly from 2010 (9%).

The key to recovery? It’s no surprise that most CFOs cite improved consumer confidence (38%) and lower unemployment (36%) as the linchpins. Others say a rebound in the housing market (11%), improved U.S. and global financial markets (10%) and lower energy costs (5%) are the most important factors for recovery.

The good news is that retailers may make it through the holiday season with decent sales. The bad news is that ongoing gridlock in Washington and a stagnated jobless rate suggest confidence levels may not trend upward in the near future.

Stay tuned for more results covering insights on M&A, holiday inventory levels and 2012 growth plans.