Bermuda's retailers are still fighting a losing battle of restricted profit margins and escalated costs, in the face of a continuing reduction in tourism.

Many suspect that as cash flow remains a lingering problem, more retailers will be forced to pack up and call it a day.

And they have not been fooled by this week's rosy spin on retail sales figures for June. They anxiously await the results of the Government's recent tax review.

John Casling of Bananas said, "Sales are totally flat and spending is down by tourists. Any figures suggesting a renaissance for tourism are an absolutely ludicrous joke.

"Government figures show four or five percent increases in June in air arrivals. But for the year, they are down. Someone needs to go back 18 years to get a true perspective of what these numbers mean.

"Last year, the figures were down. The year before they were down. In fact, they were down for a lot of consecutive years. And now we are four percentage points up. I'm not impressed.

"I would guess that the air arrival figures for June are down from June of 1980 by 20, 30 or 40 percent. You can't continue to close hotel properties and expect everything to boom.'' Mr. Casling earlier put the number of Bermuda hotel and guest house closures since 1977 at a surprising 41.

Trimingham Brothers' general manager Lawrence Trimingham conceded: "The June retail sales numbers (up 6.6 percent or 4.6 percent after inflation), I presume, were quite skewed by things like the motor vehicle and service station sector (up 13.5 percent this June over last year's June).

Tourist-dependent retailers may have not had a bad year compared to last year, but it wasn't as good as the motor vehicle dealers. Some may have an improvement of a few percentage points, but nothing like 13 or 15 percent.'' The motor vehicle and service station sector showed a 13.5 increase in sales when June was compared to June of 1997.

But Mr. Trimingham speculated that the perennial softness in tourism numbers and spending may soon go away.

He said, "It is starting to turn, which is great. I'm hopeful that going forward, we are going to see tourist spending on the rise again.'' Not everyone shares that optimism. Said HA & E Smith president Roger Davidson, "It is tough to be more optimistic when we have seen a continual erosion in the number of beds in the Island. With reduced numbers, you get reduced business volume.

"Any increase in retail sales attributable to retail shops comes, you must remember, at a time when there has been some heavy discounting going on.

People have had to discount just to get cash to cover wages and other expenses.

"If you buy something for a dollar, hold it for a year and then sell it for a dollar, the only people making anything there is the bank and the Government.

It is still a tough struggle. "I think retailers would collectively agree that if we really are finally on the right road to recovery, it is a very long road.

"We're waiting with baited breath for the new tax report to be released.

Retailers and tourism industry people have been making representations to Government about the burden we carry.

"We've also spoken to the two gentlemen conducting the tax review. We just hope that we've been listened to, but until the report is published, we won't know. They were pretty thorough. They went around and looked at various retail operations.'' Managing director of A S Cooper & Sons Ltd., Peter Cooper, said, "The business from locals has been stronger than last year. The tourist side is still soft.

"Our Dockyard sales are not what they used to be and that obviously has something to do with the ship.

"I feel more optimistic about the future but it is taking a long time for retail to recover from the recession. The downturn for retail has lasted longer than for other types of businesses.

"We still suffer from the overseas purchases of Bermuda residents. A lot of local money is spent abroad. I can't knock it. I do it myself. But I can't say the Government has been very sympathetic to our plight. Maybe they will be in the future.

"The biggest problem for retailers today, is their gross margins. We're buying fashion merchandise out of America and selling it at US retail prices, after our additional costs.'' Dicky King of Highlander in Dockyard said, "In real terms, tourism remains down. We are a long way from getting the numbers back to where they should be.''