Major Retailers Post Humdrum February Sales
With many customers already bogged down by hefty installment payments, the nation’s major merchants failed to geNerate much enthusiasm among shoppers in February, according to humdrum sales reports issued Thursday.
Among the mass merchants, J. C. Penney reported an increase of 7.4% over the same month last year, with apparel and soft home furnishings the main bright spots. By contrast, Sears, Roebuck & Co., the nation’s largest retailer--which emphasizes durable goods such as appliances--reported a decline of 2%.
Comparisons supplied by Edward Johnson, director of Johnson Redbook Service in New York, showed a continuation of trends that have been evident for months.
As a group, he said, mass merchants did “very poorly,” declining 5% from the same month a year ago. Department store sales, on the other hand, were up 6.5%, and discount stores rose 9%. Specialty stores showed the strongest gain, 15%, and are expected to turn in the best performances through the spring, Johnson said.
At Penney, “we have been forecasting moderate growth for this year in the general merchandise area,” said Rosalind Wells, chief economist. “We expect apparel and soft home furnishings to perform better than the durables.
“Installment credit is very high and savings rates are low, so people are pretty extended,” she added. Despite the recent pickup in home sales, “we’ll probably see some cutbacks this year for spending (on durables) to bring household conditions back into line.”
The February reports, the first of the retailers’ fiscal year, elicited yawns from many merchants and analysts because of their relative insignificance.
“February is a small month, sales-wise, and a small change in weather patterns or any economic event will disturb those sales very significantly,” said Robert E. Brewer, K mart’s senior vice president-finance. His company, the nation’s second-largest retailer, reported a 1.4% rise; however, taking into account only stores that have been open at least a year, K mart showed a drop of 1.2%.
Cautious Consumers
K mart Chairman Bernard M. Fauber blamed the poor showing on consumer caution and unfavorable weather conditions.
“Where better weather has been experienced, sales have been stronger,” he said. “This is an encouraging indication that the underlying trend of sales will improve as spring arrives.”
The February results “seem a little better than January but not strong by any stretch of the imagination,” said Monroe Greenstein, an analyst at the New York investment house of Bear, Stearns & Co.
Greenstein attributed the lackluster performances to several factors, including the high level of consumer debt, which has recently been at a historic peak of about 19% of disposable income, and widespread purchases of houses and cars, which have siphoned off funds.
For Carter Hawley Hale of Los Angeles, parent of the Broadway and Neiman-Marcus, a 9.4% gain at specialty stores helped offset the scant 0.7% rise at department stores, for a 3.2% boost overall. Taking into account only those stores open throughout both reporting periods, the gain was 0.1%.
May Department Stores, which owns May Co. California, reported a rise of 9.8%. Associated Dry Goods, parent of Robinson’s, had a 4.2% gain. Excluding the Ralphs supermarket division, sales at Federated Department Stores, which operates Bullock’s and I. Magnin, also rose 4.2%.
Because of mediocre sales in recent months, many retailers have warned that annual earnings reports to be issued over the next several days will be disappointing.
Retailers “had to continue to promote rather heavily through the fourth quarter to accomplish what little sales gains they got,” and that has taken a toll on the bottom line, said David Jackson, an analyst with the financial house of Morgan, Olmstead, Kennedy & Gardner in Los Angeles.
Potential Problems
Johnson of Johnson Redbook Service in New York foresees sales picking up in March unless they are “killed by cold weather or the early Easter,” which this year is on March 30.
Such seasonal considerations prompted the Gap Inc., a specialty store company based in San Bruno, Calif., to note that Thursday’s report would be its last monthly sales release.
“We believe there is too much potential for misinterpretation because of the seasonal nature of our business,” said Maurice W. Gregg, the Gap’s executive vice president.
“The figures were skewed last year by calendar differences, and many analysts got confused,” he added.
The company, which has opened 64 new stores in the last year, reported a 41.6% increase. Major Retailers’ Sales in February
In millions of dollars Year % 1986 ago change Sears 1,760 1,796 -2.0 K mart 1,316 1,298 +1.4 J.C. Penney 741 690 +7.4 Federated* 657.2 625.3 +5.1 Wal-Mart Stores 616 435 +42.0 Dayton Hudson 542.2 474.6 +14.2 Montgomery Ward 241.3 256.7 -6.0 May Dept. Stores 309.9 282.2 +9.8 Woolworth 231.0 210.0 +4.8 R.H. Macy N.A. N.A. N.A. Assoc. Dry Goods 256.4 246.0 +4.2 Carter Hawley Hale 253.2 245.4 +3.2 * Excludes supermarket sales. Excludes foreign sales.
