Riding Out The Storm

The recession will stagger many industries, but some may do fine. Here is a forecast of winners and losers.

By John E. Gallagher Monday, Jan. 07, 1991

    • (3 of 3)

    Retailing. Until the second half of this year, stores will not see much improvement over their dismal performance in 1990, when profits fell about 5%. The upswing may be too late or too modest to save some of the more debt-ridden retailers from severe hardship. Among the most troubled: Carter Hawley Hale and Federated, which owns Bloomingdale's and Burdine's. Stores that survive the shake-out will compete strenuously by offering improved services to increasingly fickle and demanding consumers. "They want retailers to make it easier for them to buy. Those who can fulfill that will do well," says Kenneth Macke, chief executive of Minneapolis-based Dayton Hudson. Among those who should succeed: discount chains, including K mart and Wal-Mart, and such specialty stores as the Gap and Victoria's Secret.

    Wall Street. Investment firms hope they have reached the end of their belt tightening, which began with the 1987 crash and led to more than 50,000 layoffs. "We look for the start of a rather long and sustained bull market beginning the third quarter," says William Schreyer, chairman of Merrill Lynch. The industry also wants the government to offer some savings incentives — for example, IRAs with better tax benefits — to overcome the nation's low savings rate (4%, vs. 17% for Japan). That may encourage consumers to invest more, which could help rebuild not only Wall Street but the rest of the U.S. as well.

    3. 1
    4. 2
    5. 3
    6. Next Page