The National Retail Federation recently announced a dismal forecast for the upcoming winter holiday shopping season: it will be the slowest since 2002, with total sales of $474.5 billion. Try telling that to high-end apparel designer and retailer Guess? Inc. (NYSE: GES), which reported a month ago record 2Q FY2008 revenues of $388 million, up 48%. Guess? is looking towards a dynamite holiday clothing sale season, with the biggest increases coming from international markets. Just over half of Guess?'s revenue presently comes from North American markets, which posted sales increases of 16% for the previous quarter, the lowest sales increase of any geographic region. Total sales in Europe rose 121%, that's correct, a triple digit increase, to $108 million. Just in the previous year, sales in Guess? Asian market, especially South Korea, have increased 75% to just over $57 million. Worldwide licensing revenues are up 51% to $21.5 million.

Unlike many retailers in the U.S., Guess? Inc. finds itself in the enviable position of not being primarily dependent on the U.S. holiday shopping season to post big gains. Despite tightening of much consumer shopping in the U.S., driven by housing concerns and a credit crunch, Guess? Inc. has posted earnings growth for 16 quarters in a row. Clearly the retailer has the right mix of higher-end apparel and edgy advertising that appeals to younger, affluent consumers whose buying habits have yet to show signs of slowing down.

Guess? Inc. recently raised its FY2008 guidance to reflect a revenue forecast of $1.56-$1.6 billion, with diluted EPS of $1.79-$1.84. Guess? Inc. also rasied its dividend to $0.08 per share. The stock will take investors for a ride. It began the year trading at $64.70, rose to a high of $85.19 on 13 March before splitting 2-for-1, and has risen more than 23% since the split, to close Wednesday at $50.75, up another $0.25 with no reason to expect a downturn anytime soon.

The National Retail Federation expects 2007 holiday sales to be up only 4%. That would make for the lowest gain since 2002. According to The Wall Street Journal "The NRF forecast follows a similarly gloomy one issued this week by TNS Retail Forward, a Columbus, Ohio, consulting company that predicted an increase of just 3.3% in fourth-quarter sales this year."

Anyone surprised by the news must have been living under a rock for the last two months. Mortgage defaults and falling home prices have made the US consumer feel as poor as a church mouse. If oil stays above $80, home energy and gas prices will begin to rise. There will be coal in the stockings this Christmas.

The prediction of slow retail sales during the most important season of the year leads to the question of whether a recession is upon the US economy and how deep it will be. Even as business spending has slowed, consumers have been willing to run up debt to continue to make purchases. Now, large retailers like Wal-Mart (NYSE: WMT) will have to face a customer who is tired of shopping.

But the consumer is beset by anxiety over the future of his earning power, the value of his home, and the direction of the economy. Ebenezer Scrooge cannot be far away.

Douglas A. McIntyre is a partner at 247wallst.com.

Yesterday, Brian White blogged about unused gift cards. Millions of people receive gift cards during the holidays, and many of these cards end up sitting in purses, pockets and desk drawers, unspent. This represents an enormous profit for retailers, who keep the payments for the cards without having to part with any merchandise. What an easy way to make money!

According to a recent AP report, Best Buy (NYSE:BBY) claimed $43 million in profit from gift cards sold but not used in two years or more. Limited Brands (NYSE:LTD), the owner of Victoria's Secret, claimed $30 million.

Gift cards are very popular. The National Retail Federation estimates that retailers will sell over $25 billion in cards this year. Somewhere between 5 and 25 percent of the cards will not be used. Interestingly, rates of use vary according to the kind of store the gift card is from. Cards for basics, such as food, get used quickly and in full. Less essential needs such as entertainment have higher rates of disuse.

I hate the idea of just giving money to retailers -- although I know there are a few gift cards in my desk drawer. So let's all make a vow to use those gift cards that come in this year. Make the stores earn their money!

I know it is way too early to begin thinking about holiday shopping, but not in the retail world. Two large retailing trade organizations has issued their forecasts for the holiday shopping season. The news isn't bad, it's just not all that good. National Retail Federation forecast 5% growth in retail sales for the 2006 holiday season over last year's holiday season sales of $435.6 billion. The average increase for each of the past ten years has been 4.6%.

So 5% is looking okay, as long as the downward trend in the housing market does not accelerate at the same time as gasoline and energy prices increase while consumers move into the colder months. Much of holiday retail spending is based on the psychological state of consumers. More negative news, such as Ford offering to buy out 75,000 employees, will put consumers in a defensive frame of mind. Preservation of capital will become widspread. Holiday spending accounts for 20% of all retail spending throughout the year.

Retail Forward Inc., another large retail trade organization, has issued its preliminary holiday shopping forecast of 5.5% increase over 2005, which was a banner holiday shopping period. Retail Forward has based its assessment on stable interest rates, a slowing housing markey and moderate increases in energy prices. This holiday shopping season is forecasted to be good for supercenters and discount clubs, while sales at higher-priced department stores will continue to lag. Retail Forward will provide a more detaled holiday shopping forecast via Webinar on Wednesday, 27 September 2006, beginning at 11 A.M. EDT.

Holiday shopping online is forecast to increase 23% from $27 billion in 2005 to $33 billion in 2006. While this may sound like a great deal of money, online sales account for just 3% for all retail sales.