Retailers’ Sales Improve for June : Analysts Cautious, Wait to Gauge Effects of Drought
Retail sales, stalled by cold and rain in April and May, improved with the weather in June, the nation’s largest general retailers reported Thursday.
However, industry analysts remained generally cautious about the outlook for consumer spending.
“It’s not a great environment, but things are better than they were,” said Linda Kristiansen, an analyst with the investment firm Dean Witter Reynolds Inc.
Walter Loeb, who tracks retailers for Morgan Stanley & Co., said, “there was a modest increase in retail sales,” as hot weather gave consumers an impetus to buy summer clothing. Other seasonal items, such as garden equipment and outdoor barbecues, also sold well, analysts said.
Sales were aided by the markdowns retailers continued to take to clear their inventories, Loeb said.
Prices Up 4.4% in May
The analysts were watching closely for any effect on sales from the drought in the Midwest. Monroe H. Greenstein, an analyst with Bear, Stearns & Co., said sales volume was unaffected last month, “but it obviously may be in July.”
Industrywide, sales were up between 3.5% and 4% last month and have risen about 2.5% so far this year, Kristiansen said. In reaching those estimates, she considered what retailers call same-store sales, those from stores open at least a year. Analysts believe same-store sales give a more accurate picture of a retailer’s performance than totals that include figures from new stores.
Retailers generally have been disappointed by 1988 sales, which have not kept pace with inflation. Consumer prices rose at an annual rate of 4.4% through May, according to Labor Department figures.
Stores have been in a slump for more than a year because of economic uncertainty and disappointment with current fashions. Sales worsened in April and May with cold and wet weather blamed for the further deterioration.
June’s sales do not mean the industry is on the rebound, the analysts cautioned.
“The pickup we’ve seen so far has been principally weather-related,” said Jeffrey Edelman, an analyst with Drexel Burnham Lambert Inc. “It does not say the consumer is going on a wild spending spree.”
Said Kristiansen of Dean Witter, “I don’t think we’re going to see a big cyclical upturn.”
Measure of Economic Health
Loeb, the Morgan Stanley analyst, was more optimistic. Although sales were up only moderately last month, “it certainly points to a better fall season,” he said.
Store owners and investors watch sales figures for an indication of retailers’ earnings, while economists monitor the results as a barometer of economic health. Consumer spending accounts for two-thirds of the gross national product.
Sears, Roebuck & Co., the nation’s largest retailer, said its overall sales were up 9.8% in June from year-earlier levels, and rose 5% for the first 22 weeks of the fiscal year. The Chicago-based retailer’s same-store sales were up 5.1% last month and 2% for the year so far.
Troy, Mich.-based K mart Corp. said its overall June sales rose 7%, while year-to-date sales were up 5.3%. Same-store sales rose 2.9% last month and 2% so far this year.
Wal-Mart Stores Inc. said its overall sales rose 32% in both June and the year to date. Same-store sales were up 13% in June and 12% for the five months.
J. C. Penney Co., based in Plano, Tex., reported its overall sales rose 3.4% last month and 2.6% for the 22 weeks. Same-store sales rose 3% in June and 1.6% for the year so far.
Dayton Hudson Corp. of Minneapolis said its overall June sales rose 19.6% and its year-to-date sales were up 18.4%. Same-store sales increased 3.3% in June and 1.9% for the year to date.
May Department Stores Co. of St. Louis said its overall sales rose 22.3% last month and 10.1% for the year so far. Its same-store sales were up 4.8% for June and 0.8% for the 22-week period.
Carter Hawley Hales Stores Inc. of Los Angeles reported that its overall sales were up 0.5% last month and down 1.4% for the year.
Limited Inc.’s Overall Sales Up
F. W. Woolworth Co., New York, reported sales increases of 11.7% in June and 12.1% for the year to date.
Montgomery Ward & Co. said its June sales were up 3.6%, and year-to-date sales rose 3.1%.
The apparel retailer Limited Inc. saw its overall sales rise 12% in June and 5% for the year so far. Its same-store sales were up 4% last month, but fell 3% over the first five months.
The results reported Thursday are from general and apparel retailers. Unlike the monthly retail sales report issued by the Commerce Department, they do not include sales of car dealers, supermarkets or restaurants.
MAJOR RETAILERS’ SALES IN JUNE
In millions % of dollars 1988 change Sears 3,110 +9.8 K mart 2,500 +7.0 J.C. Penney 1,157 +3.4 May Dept.Stores 1,100 + 22.3 Dayton Hudson 1,050 +19.6 Wal-Mart Stores 1,623 +32.0 Woolworth* 406.0 +11.7 Montgomery Ward 434.3 + 3.6 Carter Hawley Hale 242.6 + 0.5
* Excludes foreign sales.
