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Retailers Face Hazards Of Debt and Low Demand

Failing consumer confidence has deflated many stores' sales expectations

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THE turmoil surrounding R. H. Macy & Co. - which has been inching closer and closer to bankruptcy for months - is only the tip of the iceberg for the United States retail industry, experts say. Not only Macy's, but many of the nation's best retailers are facing bleak times, as consumers continue to cut spending.

Bankruptcies are on the rise, particularly among small and medium-sized firms. Many retailers are trimming staff, slamming the doors shut on marginal stores, deferring capital-spending programs, and reducing inventories.

"The situation is definitely very grim," says Janet Mangano, an analyst with Burnham Securities Inc., and the former publisher of the Johnson Redbook Service of Lynch, Jones & Ryan, a leading source of retail trade information. "There's very low consumer demand for just about any product, from retail goods to cars. Lower interest rates have not yet filtered down to consumers."

Macy's, one of the nation's largest retailers with 251 stores in the US, including the I. Magnin and Bullock's chains, is currently struggling to avoid bankruptcy. An offer to take over the chain - by Laurence Tisch, chairman and chief executive officer of CBS - has been rejected by Macy's largest creditor, the Prudential Insurance Company of America. A new offer by Mr. Tisch, or other potential buyers, is still possible.

Retail sales for 1991 were the flattest in three decades, according to the US Commerce Department, rising 0.7 percent, the smallest annual gain since 1961.

Still, a bad 1991 does not necessarily translate into an equally bad 1992, according to analysts such as Terence McEvoy, of Janney Montgomery Scott Inc. In a recent report he notes that interest rates are low, real income is slowly rising, and inflation poses no threat. He anticipates higher spending in the months ahead, as the economy rebounds.

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