Retail Store Sales Sluggish for February

Sales were unexpectedly slow in February, the nation’s largest general retailers reported Thursday, prompting worries that the year-old bout of sluggishness in the retail sector has yet to run its course.

“The results do not bode well for the economy,” said Fred Wintzer, a retail industry analyst for the investment firm Alex. Brown & Sons in Baltimore.

“It’s definitely indicative of a further slowing in the consumer sector,” agreed Jeffrey B. Edelman, an analyst with Drexel Burnham Lambert.

Retailers in all market segments, from discount chains like K mart to the more upscale Federated Department Stores, said their sales suffered last month.

Cautious spending, Wintzer said, could have a ripple effect throughout the economy. Consumer spending is the largest component of the gross national product, and when spending is sluggish, retailers order less merchandise and manufacturers in turn cut back production and may lay off workers.

Those workers then decrease their spending--causing the cycle to continue.

Consumers have been spending slowly for about a year, and the analysts predicted that the trend will continue despite an expected pickup in sales before Easter.

“After that, we would expect to see a return to slowing or sluggish trends at least for the next few months,” said Edelman.

David Wyss, an economist with Data Resources in Lexington, Mass., said consumers were expected to increase their savings this year as a hedge against economic uncertainty.

“The consumer got pretty spent out last year,” he said, adding that the October stock market collapse exacerbated worries about the economy.

February is generally one of the weakest months of the retail year, but last month’s results were “disappointing and significantly below expectations for most retail companies,” said Jeffrey Feiner, an analyst with Merrill Lynch & Co.

Edelman said the figures “appear to be miserable,” but he noted they are being compared to a strong performance by retailers in February, 1987. He also attributed some of the slippage to harsh winter weather the first two weeks of the month.

The results reported Thursday were from general retailers and apparel stores. They do not reflect sales of auto dealers or supermarkets.

The apparel retailers, who have been among the hardest hit by sluggish sales, are unlikely to see much relief during the first half of this year, Wintzer said.

Last summer, consumers became bored with fashions and cut back their clothing purchases through the fall and winter. When sales began to decline, it was too late for retailers to change spring 1988 merchandise that were similar to the 1987 styles, so consumers are not expected to greet the new lines enthusiastically.

The retailers are currently testing new fashions in hopes of turning their performance around later this year, Wintzer said.

MAJOR RETAILERS’ SALES IN FEBRUARY

In millions Year % of dollars 1988 ago change Sears 1,892 1,846 +2.5 K mart 1,470 1,459 +0.8 J.C. Penney 742.0 746.0 -0.5 May Dept. Stores 598.2 606.0 - 1.3 Federated* 710.5 718.9 -1.2 Dayton Hudson 699.1 601.8 +16.2 Wal-Mart Stores 1,171 887.0 +32.0 Woolworth** 270.0 246.0 +9.4 Montgomery Ward 269.6 276.6 - 2.5 Carter Hawley Hale 152.0 159.6 - 4.8

* Excludes supermarket sales.

** Excludes foreign sales.