Retailers’ Sales Up Modestly in October

The nation’s large retailers on Thursday reported modest to good October sales with apparel stores doing better than general merchandise chains that depend heavily on sales of expensive durable goods.

Karen Sack, a retail analyst at Standard & Poor’s Corp., summed up the month this way: “It was OK. It wasn’t a disaster, but it wasn’t great.”

Clothing retailers rang up better results than general merchandisers, such as Sears, Roebuck & Co., that have a large proportion of their business devoted to “big-ticket” durable items, ranging from refrigerators to sofas.

But even apparel stores suffered in some parts of the country where unusually mild weather discouraged shopping for heavy clothes.

On a positive note, analysts said consumers probably postponed purchases of winter things last month, which should help sales during the crucial Christmas season.

The shift that has been taking place in consumer spending patterns--toward apparel and other soft lines such as linens and away from durable goods--should continue into the peak holiday shopping season.

Walter Loeb, a retail analyst at Morgan Stanley & Co., said consumers are becoming more cautious spenders given the weakness in the economy, particularly on the manufacturing side.

Retailers’ results are watched closely for clues about consumer spending, which accounts for about two-thirds of total U.S. economic output.

Loeb said sales of men’s wear, furs and automobiles are among the categories performing poorly. He said those categories are early indicators of the national spending mood.

“I’m looking for a slowdown in consumer spending in the Christmas season,” Loeb said, noting that retail sales gains will be “meager.”

Store owners might have to slash prices to entice reluctant consumers--which would be good news for shoppers hunting for bargains on gifts.

“I look for a very promotional Christmas,” said Loeb.

In any case, sales gains in November and December likely will not look great because the tallies will be compared to last year’s robust sales.

Last month’s results varied widely among the types of retailers, and for this reason analysts said it was difficult to generalize.

Jeffrey Edelman, a retail analyst at Drexel Burnham Lambert Inc., said general merchandise sales rose an average of 4.3% in October for stores open at least a year, compared to September’s 5.9% increase.

Sears, the largest U.S. retailer, said its sales edged up 0.7% in the four weeks ended Oct. 28, but sales at Sears stores open at least a year, called same-store or comparable-store sales, were flat.

Retailers and analysts regard same-store sales as a better measure of a company’s performance than tallies that include newly opened stores.

Michael Bozic, chairman and chief executive of Sears Merchandise Group, said revenue has been hurt by a decline in demand for durables and by the shift in the company’s pricing and merchandising strategy.

The shift to “everyday low prices” that began in March and the discontinuation of major sales promotions, such as super Saturdays, has made comparisons between sales this year and last year difficult, he said.

But he said at a meeting with financial analysts in New York that Sears is in good shape for Christmas. Inventories are in line to meet expected demand.

MAJOR RETAILERS’ SALES IN OCTOBER

In millions of dollars 1989 % change Sears 2,530 +0.7 K mart 2,070 +4.7 Wal-Mart Stores 2,190 +22.0 J.C. Penney 1,280 +9.6 Dayton Hudson 969 +16.2 May Dept. Stores 706 + 9.3 Melville Corp. 563 +12.8 Woolworth* 356 +7.9 Limited Inc. 335 +9.0 TJX** 172 +3.4 Montgomery Ward 369 +1.0 Carter Hawley Hale 204 +1.6

* Excludes foreign sales. ** Formerly Zayre