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Reports Predict Holiday Cheer for Retailers

BY CSA STAFF

Woburn, Mass., Two different reports point to a promising 2006 holiday shopping for retailers. A recent Prospectiv Consumer Preference Index (CPI) survey found that 68% of consumers surveyed expect to spend more or the same in 2006 when compared to 2005.

Opportunities for on-line sales are also looking favorable this year. In fact, 19% surveyed expect to make more on-line purchases in 2006. Similar to the findings of Prospectiv’s 2005 CPI poll on holiday shopping, the majority of consumers (73%) in 2006 will rely on the Internet to research and compare prices and varieties of holiday products and gifts (up from 71% in 2005).

Top reasons consumers conduct holiday shopping on line include convenience (47%) and avoiding crowds (18%) with better deals coming in third (15%). About 56% of consumers said free shipping would be the top motivator to persuade them to spend more of their holiday dollars on line. <p In other findings, gift-givers are expected to spend a total of $949 on Christmas gifts this year, up 9.1% from the average of $870 spent last year, according to a survey conducted by Unity Marketing. About 69% of gift-givers surveyed say they plan on shopping at discounters this year, down from 78% who planned to shop discount in 2005. The survey also said that about one-third of shoppers have already started their holiday gift shopping and have spent on average just under $300 so far on Christmas 2006 gifts. This is 16% more than they had spent through the same period last year.

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Wal-Mart Cuts Prices on Electronics

BY CSA STAFF

New York City, Wal-Mart Stores stepped up its discounting Friday in advance of the holiday season, announcing deep price cuts on almost 100 electronics that focused on high-definition TVs, cell phones and digital cameras, according to the Associated Press. The news came a day after the world’s largest retailer announced disappointing October sales and a lackluster November outlook.

The discounts are effective through Dec. 31.

In a release Thursday, Wal-Mart said it planned to “reinforce Wal-Mart’s price leadership position” in such areas as toys and electronics. The discounts on electronics follow Wal-Mart’s move in mid-October to cut prices on more than 100 holiday toys, which the company said is already resulting in a “significant lift in unit volume.”

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CVS Placed on CreditWatch

BY CSA STAFF

New York City, Standard Poor’s Ratings Services said it placed its long-term ratings, including the “BBB+” long-term corporate credit rating, on CVS on CreditWatch with positive implications. The “A-2” short-term rating on the company was affirmed, though this rating was not placed on CreditWatch.

The CreditWatch action follows the chain drug retailer’s announcement that it has entered into a definitive agreement to merge with Caremark Rx. Under the terms of the agreement, Caremark shareholders will receive 1.67 shares of CVS for each share of Caremark. Pro forma for the transaction, CVS’ shareholders will own 54% of the combined company and Caremark’s shareholders will own 46%.

The new company will be called CVS/Caremark Corp. The transaction is subject to stockholder approvals from both companies as well as regulatory approval, and is expected to close in six to 12 months.

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