Retail Sales Drop 1.9% in March but Major Chains Report Gains

Continuing an uncertain trend of recent months, the government and major retailing chains issued conflicting reports on March sales Thursday.

According to the Commerce Department, a drop in sales of autos and other durable goods sent U.S. retail volume plummeting 1.9% for the month, the biggest monthly decline in seven years.

Meanwhile, large chains reported that an early Easter helped bolster sales for the month.

Many economists said that they were not surprised by the government report and indicated that it was a further sign of a slowing in the economy’s growth rate.

David A. Wyss, senior vice president at Data Resources of Lexington, Mass., said: “I don’t think the decline itself should be taken very seriously. It was offset by the big rise we saw in February. But the overall flat picture for the last three months seems to be an accurate reflection of the flatness of the economy. We did not expect a drop in sales in March, but we had expected a much slower economy.”

$110.5-Billion Total

In Santa Barbara, where President Reagan is vacationing, White House spokesmen dismissed the latest retail sales figures tersely, saying that they are a “volatile indicator” that fluctuates from month to month.

The Commerce Department reported that retail sales in March totaled a seasonally adjusted $110.5 billion, down from February’s revised $112.7 billion but up 5.8% from March, 1984. The March decline followed a 1.6% increase in February and was the largest drop since January, 1978.

Excluding autos, total retail sales were down 1.4% in March from February but were 4.5% above last year.

Major retailers reported far more robust results in their regular monthly report. For the five weeks ended April 6, the chains reported increases ranging from 2.7% for Sears, Roebuck & Co. to 22% for May Department Stores.

Walter Loeb, an analyst with Morgan Stanley in New York, noted: “These figures do not coincide with the Commerce Department’s figures” because the comparisons are year-to-year and the reporting period used by the retail companies is one week longer than the government’s. In addition, the retailers’ March results were bolstered by sales of apparel for Easter, which occurred April 7 this year as opposed to April 22 last.

Loeb said that March sales this year picked up particularly during the last week before Easter, a period that was not included in the government’s tabulation.

Loeb said results for March and April must be analyzed together to assess a sales trend. “April will be somewhat slower,” he predicted.

To help shore up sales in April, some chains, like Carter Hawley Hale Stores, the Los Angeles-based parent of the Broadway, Neiman-Marcus and Bergdorf Goodman, have postponed some promotions from March.

Loeb said that, with little inflation to concern them, retailers’ profits should be stronger in the first quarter, which ends at the end of April.

Howard Goldfeder, chairman of Federated Department Stores, said: “The underlying strength of sales in the month (March) is difficult to analyze, due to the inclusion of an earlier Easter in this period and the shift of some traditional March promotions into April this year.”

Wyss noted that figures reported by the chain stores do not show as dramatic a downward swing in sales as the government report.

“It raises doubts about the accuracy of the government figures,” he said. “You know Sears knows for sure what is selling, but I’m not so sure the Commerce Department does.”

Loeb said: “I was particularly encouraged by department store sales, which were boosted by apparel and children’s wear. Durable goods were somewhat weaker than expected, but that is typical of an Easter period.”

Among the retailers:

- K mart said sales in March were up 19.8%. Sales on a comparable-store basis--for stores open one year or longer--rose 10.5%.

- J. C. Penney said sales rose 7.2%.

- Federated Department Stores, parent of Bullock’s and I. Magnin, said sales, excluding those of supermarkets, rose 11.7%.

- Dayton-Hudson said sales were up 19.7%, while comparable-store sales rose 14.7%. The company’s Hayward, Calif.-based Mervyn’s division reported a 22% increase in sales, while its Target division had an 18% increase.

- Associated Dry Goods, the parent of Robinson’s, said total sales rose 21%, with those for its department store group rising 19.7%.

- May Department Stores said sales increased 22%, with comparable-store sales up 8.4%.

- Carter Hawley said sales were up 9.5%, with comparable-store sales 7.9% higher.

The government’s report showed that retail sales in the first quarter were 1.4% higher than in the previous quarter and 5.6% above the first quarter of 1984.

Sales of durable goods fell 2.4% in March primarily because of a 4% drop in auto sales. The Commerce Department said this was the first monthly decline in seven months for the automotive group. Auto sales, however, were 10.1% above March of last year.

Sales of building materials rose 3.6% from February, when poor weather dampened sales, and were 7.2% above the March, 1984, level.

Wyss said the weakness in auto sales reflected in part a more normal market. “We had had a sharp rise in auto sales in December and January, which was a recovery from strike problems of the previous September and October. To some extent, what we’re seeing is only a normalization.”

Meanwhile, sales of non-durable goods declined 1.7% in March from February but were 3.4% above a year ago. All major goods showed declines in sales except for apparel.

Sales of food stores fell 1.6% but were 2.8% above last year. Sales for eating and drinking places fell 2.4% in the month after a gain of 2.1% in March but were up 4.2% from March, 1984. Drug store sales declined 1.9% in March but were 9% ahead of last year. Receipts at gasoline service stations were down 1% in March from February and 5.7% below year-ago sales. The Commerce Department attributed the year-to-year decline to lower pump prices.

General merchandise sales were down 2.2% in March but rose 9.2% from last year. Department store sales were down 2.3% in March from February but 9.3% above a year ago. Sales of apparel and accessories posted a 0.9% increase in March from February.

Major Retailers’ Sales in March

In millions Year % of dollars 1985 ago change Sears 2,025 1,971 +2.7 K mart 1,960 1,640 +19.8 J. C. Penney 1,061 990 +7.2 Federated 837 751 +11.5 Dayton-Hudson 729 609 +19.7 Wal-Mart Stores 593 436 +36.0 Montgomery Ward 505 524 -3.7 Woolworth 495 462 +7.2 May Dept. Stores 444 364 +22.0 Assoc. Dry Goods 375 310 +21.0 R. H. Macy 367 339 +8.1