Slowing Economy Hits Major Retailers; Sales Disappointing in May
A sluggish pace of consumer spending in May produced disappointing sales for the nation’s major retailers, which reported mixed results Thursday.
The May results, which were against exceptionally strong gains in May, 1984, ranged from sales declines for mass merchandisers such as Sears, Roebuck & Co. and J. C. Penney to single-digit increases for some other department and specialty store chains. Sales gains, however, generally lagged behind the rate of increase during the first quarter.
Analysts and retailers described the May sales results as further evidence of a slowing economy and an uncertain outlook for consumer spending.
“In general, the May sales reports were disappointing and, in our opinion, reflected the continued slowing economic environment,” said Jeffrey Feiner, an analyst with the brokerage firm Merrill Lynch, Pierce, Fenner & Smith.
‘Slow Retail Picture’
He added that waning consumer confidence and a slowing in employment were having an adverse affect on retail sales. While tax refunds may help sales, he said, “we still look for a continued generally slow retail picture.”
Philip M. Hawley, chairman and chief executive of Los Angeles-based Carter Hawley Hale Stores, parent of the Broadway and Neiman-Marcus, said: “Customer spending was softer during the month, particularly in merchandise for the home, as shoppers were cautious in adding to their credit balances. However, we continued to see activity in the cosmetics, young men’s and electronic categories.”
Apparel sold well during May, but major appliances and other durable goods continued on a flat sales trend that has existed since the beginning of the year.
Sales gains for most retailers were even lower during the month after adjustments for stores opened less than a year.
At Sears, the nation’s largest retailer, sales fell 1.3% in May from the same month a year ago. Sales for the year to date were up only 0.9%.
K mart reported that sales for the month were up 12.2% from a year ago. But sales on a comparable store basis--those opened one year or more--were up only 3.2%. Sales overall for the year were up 14.8%.
J. C. Penney suffered a sales decline of 1.8% from May, 1984, when sales were up 25.4%. Comparable-store sales during the latest period were down 2.7%. Sales for the first four months of the year were up 1.4%, or 0.1% on a comparable-store basis.
F. W. Woolworth said sales of its U.S. retail group were up 8.6%, which brought the gain for year-to-date sales to 9% more than the comparable period last year.
Federated Department Stores, the Cincinnati-based parent of Bullock’s and I. Magnin, said May sales, excluding supermarket operations, were up 4.6%. Montgomery Ward, the Chicago-based retail unit of Mobil, said sales declined 4.7% in May.
Carter Hawley said May sales rose 6.7%. Comparable-store sales were up 5.1%, with the specialty store group posting a bigger gain than the total company and its department store group. Sales for the year so far were up 10.7%, with comparable-store sales up 9.2%.
New York-based Associated Dry Goods, parent of Robinson’s in Los Angeles, had a May increase of 5.6%. Its department store sales rose 8.1%, while discount store receipts were up 2%.
Dayton-Hudson Corp., which owns Hayward, Calif.-based Mervyn’s, said May sales rose 11.2%. Comparable-store sales, however, were up only 6.9%. Kenneth A. Macke, Dayton-Hudson chairman and chief executive, said May sales “were below expectation at all companies except Target.” Sales so far this year were up 15.1%, with sales on a comparable-store basis up 10.1%.
May Department Stores, the St. Louis-based parent of May Co. stores in California, had a May sales increase of 5.6%. Sales for the fiscal year’s first four months were up 11.5%.
Wal-Mart’s sales were up 30% but only 8% on a comparable-store basis. Year-to-date sales were up 33% but only 11% on a comparable-store basis.
Allied Stores said sales were up 2% but only 0.4% on a comparable-store basis. Sales for first four months were up 3.9%, or 2.4% on a comparable-store basis.
Major Retailers’ Sales in May
In millions Year % of dollars 1985 ago change Sears 1,752 1,775 -1.3 K mart 1,800 1,600 +12.2 J. C. Penney 864.0 880.0 -1.8 Federated* 582.0 556.5 +4.6 Wal-Mart Stores 653.0 502.0 +30.0 Dayton-Hudson 599.6 539.3 +11.2 Montgomery Ward 431.7 453.1 -4.7 May Dept. Stores 364.2 344.7 +5.6 Woolworth 271.4 249.9 +8.6 R. H. Macy 323.9 304.5 +6.4 Assoc. Dry Goods 332.8 315.1 +5.6 Carter Hawley Hale 264.5 247.8 +6.7
*Excludes supermarket sales
