Major Retailers’ Sales Gone With the Wind; Poor Results in Month
Along with auto dealers, whose rebates and low loan rates siphoned off consumers’ dollars, Hurricane Gloria took the wind out of retailers’ sales in September, causing the major chains Thursday to report disappointing results compared to the same month last year.
As in August, department and specialty stores continued to outshine the lower-priced, mass-merchandise chains, analysts said. Sears, Roebuck & Co., the nation’s largest retailer, and No. 2 K mart had only marginal increases, while J. C. Penney, the third-largest retailer, actually showed a decline--an unusual occurrence in the industry. The major retailers overall averaged lackluster gains of about 5%.
Low Profile by Consumers
“We weren’t expecting much in the way of growth, and most of the retailers managed to meet our expectations,” said Terry McEvoy, an analyst with Smith Barney, Harris Upham & Co. in New York. “The consumer appears to be taking a low profile, and I see nothing out there that’s going to change that.”
The poor September showing indicates that department stores still need to promote heavily to bring in customers, according to David Jackson, an analyst with Morgan, Olmstead, Kennedy & Gardner in Los Angeles. However, as retailers head into the crucial Christmas season, they should be in better shape than last year because of leaner inventories, he said.
The key will be whether business picks up in October, said Monroe Greenstein, an analyst with Bear, Stearns & Co. in New York. If it doesn’t, “the markdowns in November and December will be greater than planned, and earnings will be less than anticipated.”
Sounding a less pessimistic note was analyst Stuart Robbins of Donaldson, Lufkin & Jenrette in New York. “We should not take too much stock in September sales gains,” he said. “From mid-month through the end of October, we’re really in a transition period from back to school to Christmas and can get strange comparisons.”
He noted that the hurricane shut down many East Coast stores during the last weekend in September, and retailers were hurt by comparisons with strong sales in the same period a year ago.
In addition, he said, consumers scurried in September to take advantage of auto companies’ incentives, boosting car makers’ sales 43.6%, largely at the expense of general merchandise retailers.
Sears’ monthly performance reflected consumers’ continued reluctance to spend at such mass merchants: The 0.3% gain in its sales during the five weeks ended Oct. 5 matched the company’s year-to-date increase.
K mart reported a 2.7% increase for the five weeks and a 9.7% gain for the year to date. Taking into account only those stores open during both reporting periods, the company showed a decline for the five weeks of 5.2%.
Penney showed a decline of 0.5% for the five weeks and a gain of 0.6% for the eight months.
Most retailers operate on a fiscal year starting in February.
Carter Hawley Hale Stores, the Los Angeles-based parent of the Broadway and Neiman-Marcus, reported an increase of 7.5% for the month to $351.5 million. For the first eight months of the fiscal year, sales rose 9.8% to $2.3 billion. Discounting stores opened within the last year, sales were up 4.6% in September and 7.8% for the year to date.
“September sales showed some improvement over August results despite the movement of some major promotions from September to October,” said Philip M. Hawley, chairman and chief executive. The company showed consistently better gains in specialty stores than in department stores, with sales of apparel strong and sales of home furnishings weak, continuing a pattern set early in the year.
May Department Stores, which operates May Co. California, reported a gain for the five weeks of 5.5%, reflecting the average for major retailing chains. Sales for the year to date increased 10.7% to $3.07 billion.
Federated, which owns Bullock’s and I. Magnin, said its sales--excluding those of supermarkets--rose 3.1% for the month to $725.3 million. For the year to date, sales increased 6.5% to $4.89 billion.
Dayton-Hudson, the parent of Mervyn’s and Target, said sales rose 11.5% over figures for the previous year’s period, which were adjusted to exclude the results of two chains that were sold. Eight-month sales jumped 14.8% to $5.06 billion. Sales of comparable stores rose 6.8% in September and 9.8% in the 35 weeks.
Associated Dry Goods, the parent of Robinson’s, reported that September sales rose 9.2%. For the eight months, sales were up 11%.
Major Retailers’ Sales in September
In millions Year % of dollars 1985 ago change Sears 2,653 2,646 +0.3 K mart 1,990 1,938 +2.7 J. C. Penney 1,075 1,080 -0.5 Federated* 725.3 703.9 +3.1 Wal-Mart Stores 628.0 487.0 +29.0 Dayton-Hudson 724.5 650.0 +11.5 Montgomery Ward 423.9 435.9 -2.8 May Dept. Stores 477.4 452.6 +5.5 Woolworth 342.7 318.5 +7.6 R. H. Macy 406.9 379.9 +7.1 Assoc. Dry Goods 390.6 357.8 +9.2 Carter Hawley Hale 351.5 327.0 +7.5
*Excludes supermarket sales Excludes foreign sales.
