Retailers’ Sales Off in November but Signs of Christmas Surge Seen
Retailers issued disappointing sales results for November but indicated Thursday that they were cheered by signs of building momentum as the traditional Christmas shopping season got under way on the last two days of the month.
Continuing a trend that has extended over most of this year, the nation’s major mass merchandisers--Sears, K mart and Penney’s--reported declines or soft increases, whereas companies with upscale department and specialty stores registered modest gains. Even though sales were more brisk at the end of the month, merchants cautioned that it’s too soon to tell whether this will be a season for them to be jolly.
Carter Hawley Cautious
“This is one of those years that comes along every five or six in retailing when you’re going to have to look at November and December on a combined basis,” said Philip M. Hawley, chairman and chief executive of Carter Hawley Hale Stores, the Los Angeles-based parent of the Broadway and Neiman-Marcus. “We won’t really know where we are until close to the end of December.”
Retailers said this November’s results were not comparable to last year’s because Thanksgiving, which kicks off the traditional Christmas shopping season, fell six days later this year than last. For most companies, last year’s November period included at least a week of the Christmas selling season.
K mart, for example, reported a sales decline of 0.9%, based on a four-week period ended Nov. 27, the day before Thanksgiving. Last year, the retailer’s reporting period ended on Nov. 28, six days after Thanksgiving.
‘Reasonable Level’
Sears, the nation’s largest retailer, showed a decline of 4.4% and Penney’s an increase of 3% for the period ended Nov. 30. However, adjusting for calendar-year differences, Penney’s would have shown an increase of 15.5%.
On the other hand, Carter Hawley Hale showed an increase of 9.5% for the four weeks ended Nov. 30 over last year’s period, which ended Nov. 24. After adjusting for the calendar change, however, the retailer would have shown a decline of 1%.
Overall, retailers’ “sales came in at a reasonable level and were fairly good late in the month during the kickoff to the Christmas selling season,” said Thomas P. Farley, an analyst with Salomon Bros. in New York.
He cautioned that “a superficial reading of the November data would lead to a misinformed conclusion that the results were very poor, whereas . . . our reading would be that the results, particularly late in the month, represented a firming in the business trend.”
Monroe Greenstein, an analyst at Bear, Stearns & Co. in New York, noted a “certain consistency” in the results. Stores serving middle- and lower-income customers showed a “fairly uniform sales softness,” while there was strength in department and specialty stores serving more affluent customers.
One such company, Associated Dry Goods, the parent of Lord & Taylor and Robinson’s, appears to be satisfied with its results. Sales, which rose 12.8%, “were approximately on plan,” said John Manos, divisional vice president.
More Optimistic
Although acknowledging that adjusting for the late Thanksgiving would have resulted in a decrease of 0.9%, Manos said the company expects to “make it up in December.”
“We’re more optimistic than other retailers” because of our upscale department and discount stores, Manos said. “We feel that our customer always has a good Christmas and always purchases many gifts. We feel we will do well.”
A. Gary Shilling, an economist in New York, said two factors continue to argue against a stellar Christmas season for retailers. “The consumer is a lot deeper in hock than a year ago, which suggests sales will be modest,” he said, and “the consumer is showing a disinflationary buying attitude. Now they don’t buy until things are on sale.”
Although retailers have leaner inventories than last year, he said, they might have to further cut prices to move their merchandise. He foresees “a pretty miserable year (for retailers) profit-wise.”
Analyst Greenstein added that caution on the part of consumers dictates that the “Christmas season will likely come in late--the last five to six shopping days. It’ll be another cliffhanger.”
Major Retailers’ Sales in November
In millions Year % of dollars 1985 ago change Sears 2,666 2,789 -4.4 K mart 1,902 1,919 -0.9 J.C. Penney 1,341 1,302 +3.0 Federated* 773.7 704.0 +9.9 Wal-Mart Stores 925.0 711.0 +30.0 Dayton-Hudson 836.8 679.9 +23.1 Montgomery Ward 435.2 453.9 -4.1 May Dept. Stores 515.4 461.5 +11.7 Woolworth 289.5 289.0 +0.2 R.H. Macy 445.6 389.7 +14.4 Assoc. Dry Goods 431.2 382.2 +12.8 Carter Hawley Hale 386.3 352.9 +9.5
*Excludes supermarket sales. Excludes foreign sales.
Figures not adjusted for calendar year differences.
