Retail Sales Perk Up but Analysts Cautious
The nation’s major retailers said Thursday that a late round of back-to-school buying sparked a modest upturn in sales last month over August, 1984, but the increases were uneven with department stores and specialty shops far outperforming the lower-priced, mass-merchandise chains.
Nonetheless, the August results--which ranged from a decline for Montgomery Ward to double-digit gains for such other companies as Dayton-Hudson and Associated Dry Goods--was an improvement over a string of disappointing gains reported the past few months.
Analysts cautioned, however, that it is too early to tell whether consumer spending will pick up in the fourth quarter, with its crucial Christmas buying. Consumer debt continues at near-record levels and is likely to rise with the recent huge increase in auto sales, they said.
Viewed as Bellwether
While more affluent consumers were shopping the department and specialty stores last month, “the broad-based, middle-income consumer has not yet stepped up spending for general merchandise,” explained Monroe Greenstein, an analyst with Bear, Stearns & Co. in New York.
The back-to-school shopping period, often viewed as a bellwether of fourth-quarter sales, traditionally begins in mid-August and runs through mid-September. If sales for the first two weeks of September show a good increase from a year ago, Greenstein said, “that bodes well for the balance of the year. If not, that bodes poorly for the Christmas period.”
“Generally, we were pleased with back-to-school sales,” said Kenneth A. Macke, chairman and chief executive of Dayton-Hudson, parent of Mervyn’s and Target. “However, we don’t believe they necessarily indicate that the consumer is back to spending. We see no sign of any real strengthening in retail sales.”
Dayton-Hudson’s August sales were up 16.5% but only 11.5% when adjusted for stores opened at least 12 months.
August sales were not entirely comparable among retailers who are using a 52-week fiscal year, compared to the 53-week year used in 1984. Once very five years, retailers accrue an extra week; because of this, the fourth week of this August fell closer to the first day of school.
This helped sales in the latest period. For example, Associated Dry Goods, the New York parent of Robinson’s, said sales rose 19.8%; but, if those results are compared to the similar calendar week a year ago, the increase shrinks to 10.1%. Similarly, Federated Department Stores, the Cincinnati parent of Bullock’s and I. Magnin, said sales (excluding supermarkets) rose 11.6% but only 8.5% on a comparable calendar basis.
Carter Hawley Hale Stores, the Los Angeles-based parent of the Broadway, Neiman-Marcus and Bergdorf Goodman, said August sales rose 6%. “August presented the most difficult challenge of the fall season, since we were going against particularly strong results for the comparable period in 1984 and 1983,” said Philip M. Hawley, chairman and chief executive. “We expect to produce good sales results for the third quarter and remainder of the year.”
Major Retailers’ Sales for August
In millions Year % of dollars 1985 ago change Sears 2,192 2,161 +1.4 K mart 1,638 1,544 +6.1 J. C. Penney 998.0 976.0 +2.3 Federated* 612.8 549.0 +11.6 Wal-Mart Stores 732.0 553.0 +32.0 Dayton-Hudson 659.7 566.1 +16.5 Montgomery Ward 348.1 358.2 -2.8 May Dept. Stores 379.2 327.2 +15.9 Woolworth 303.8 280.6 +8.3 R. H. Macy 349.3 306.9 +13.8 Assoc. Dry Goods 307.4 256.7 +19.8 Carter Hawley Hale 274.0 258.6 +6.0
