The credit squeeze that culminated in a major financial meltdown last week has been impacting retail businesses throughout 2008, according to a new study by BDO Seidman, LLP. The survey found that nearly half (41%) of CFOs at U.S. retailers have experienced a tightening of credit by their lenders. In addition, more than a third (37%) of the CFOs report a reduction of planned inventory purchases for 2008, further illustrating a difficult lending and economic environment.
“There are a number of factors that are weighing on retailers, but the compounding affect of reduced consumer spending and a restricted credit environment has been especially challenging,” said Doug Hart, a partner in the Retail and Consumer Product Practice at BDO Seidman. “We have read the headlines about the bankruptcies and government takeovers of financial institutions, but this shows the knock-on effect; retailers are now suffering from a drain on liquidity.”
The findings are from the most recent edition of the second annual BDO Seidman Retail Compass Survey which surveyed 100 CFOs at leading retailers with revenues of more than $100 million, including 24% of the top 100 based on annual sales revenue. The survey was conducted in August and September of 2008. Among the findings: