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Christmas Projections Already?

The back-to-school shopping season isn't quite over yet, but some retailers are already warning that the second half of the year is going to be a rough stretch. Some are even preaching caution for the Christmas shopping season.

Numerous retailers, from Wal-Mart Stores Inc to Target Corp to Ross Stores, have warned that the second half of the year will be more difficult than the first as the deteriorating housing market, higher fuel and food costs, and an undulating stock market take a toll on shoppers.

Wal-Mart cut its full-year earnings forecast last week, saying its customers are running out of cash by the end of the month, while Staples Inc's Chief Executive Ron Sargent said on Tuesday that he was "worried" about the current state of consumer spending.

Clothing chain Tween Brands Inc on Wednesday reduced its full-year earnings outlook, while Ross Stores joined the chorus, cutting its full-year earnings forecast because of "macro economic factors, recent results and projections from other retailers, and our own sales trend that slowed versus plan beginning in mid-July."

Retailers are preparing cautiously for the second half of the year, reducing inventory plans now to try to avoid costly markdowns or price wars later on.

"There's caution in the air," said Marie Driscoll, retail analyst at Standard & Poor's.

More here.

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