Large Retailers Report Sales Gains in January : * Economy: Analysts say the results reflect how low sales were last year when the nation was at war and shoppers stayed home.
The nation’s largest retailers Thursday reported that January sales rose at their steepest pace in nearly two years, but they declined to predict whether the increase is a signal of resumed consumer spending and confidence.
Such a conclusion, several analysts said, cannot be accurately made until at least March or April, and only then if retail sales are running consistently ahead of last year’s level.
Still, the pickup in January followed months of sluggish business and a disappointing Christmas season that landed several retailers--most notably R. H. Macy & Co.--in bankruptcy court. And retailers, while cautious, were grateful for a bit of good news at the conclusion of what has been one of the worst years ever for them.
“Obviously I’m pleased at the January results,” said Kenneth Macke, chairman of Dayton Hudson Corp., which operates the Target and Mervyn’s retail chains. “But there are just too many variables to read this as a trend of the economy. I want to see more before I make that judgment.”
Analysts--and even some retailers--noted that any comparison between last month and January, 1991, is skewed tremendously by the outbreak last year of the Persian Gulf War, which kept millions of Americans glued to their television sets and out of the shopping malls.
In addition, analysts said lower interest rates, pent-up demand after a dismal Christmas sales season and heavy retailer discounting contributed to the January sales rise.
Overall, January sales rose 8% over the previous year, according to a composite index of 11 major retailers’ comparable stores--those outlets open at least a year--developed by Dean Witter Reynolds Inc., a New York brokerage. That increase is the index’s highest jump since February, 1990, when it rose 8.1%.
As has been true throughout the recession, sales at discount and off-price retailers were stronger than those at traditional, full-price department stores, indicating that budget-conscious consumers continue to “trade down” by looking to lower-priced stores for better values.
For example, Pic ‘N’ Save’s comparable-store January sales were 17.7% higher than those of a year ago, and Wal-Mart Stores Inc.’s sales rose 13% over last year. By contrast, sales for J. C. Penney & Co. rose 6% in the month, and sales at May Co. stores rose 8.7%.
Many analysts said they would have been surprised if sales had not risen dramatically in January over a year ago, if only because the country is no longer at war. “We were all too transfixed watching bombs dropping on Baghdad to go to the malls,” said Kurt Barnard, publisher of Retail Marketing Report in New York.
Other analysts cautioned that despite the sales jump, many retailers lured their shoppers with sales and deep discounts that will not help them win their fight to become profitable. “They didn’t make money selling goods in January,” said Carl Steidtmann, chief economist at the Management Horizons division of Price Waterhouse in Columbus, Ohio.
Stephen E. Watson, president of Dayton Hudson, whose January comparable-store sales rose 8.2%, said the volumes reflected the continuation of “promotionally and clearance-driven” sales. He said the lower profit margins earned all year would have a “substantial impact” on the company’s profit for the full year. Other retailers have issued similar warnings.
The retail sales results reported Thursday are different from the monthly retail sales figures issued by the U.S. Commerce Department. The latter report, which includes sales from supermarkets, restaurants and car dealers, is due out later this month.
Retail’s Rebound
After a dismal holiday selling season, major retail chains showed signs of recovery in January. Analysts warn, however, that comparing sales in January, 1992, to sales a year earlier could be misleading. A year ago, consumers were watching Persian Gulf War footage instead of shopping, and sales were woefully low.
Percent change Jan. ’92 Retailer over Jan. ’91 Wal-Mart 13.0% Kmart 6.2% Sears 7.7% Gap 14.0% J.C. Penney 7.3% Dayton Hudson 8.2% May Dept. Store 8.7% Woolworth 6.0% Pic ‘N’ Save 17.7%
Source: Retailers Reports
