Sales at the nation's biggest retailers languished again in April, providing further evidence that consumers are uneasy about the economy and health care reform and have regained their frugal approach to shopping.
Monthly results released by the store owners Thursday were an improvement over the dismal sales of February and March. But the April figures were "a lot softer than people expected," said Karen Sack, a retail industry analyst with Standard & Poor's Corp.
Inclement weather was a problem for the third straight month and hit apparel retailers like Limited Inc. and Gap Inc. particularly hard. Beyond that, "all the news coming out of Washington on the economy has made consumers a bit more cautious," Sack said.
The biggest restraint on consumers was fear of the unknown--how much their taxes might rise, what would happen to the economy and how they would fare under health reform.
Until there are answers to these questions, "people are not spending and will continue so," said Walter Loeb, a retailing analyst and consultant.
A more upbeat assessment came from Thomas Tashjian of First Manhattan Co. He noted that sales of furniture and other big-ticket items remained strong, a positive sign for future consumer spending.
Retail sales are closely watched as a sign of the economy's health--as well as the industry's own condition--and are taking on particular significance after a spate of negative economic news of late.
This week, the government's chief economic forecasting gauge fell sharply, indicating slow economic growth ahead.
Weak retail sales tend to "back up" into the economy, forcing store owners to cancel orders and manufacturers to cut production and possibly lay off workers.
The first quarter of the retail fiscal year, which for most companies ended with April, was generally a disappointment. Several store owners, including Kmart Corp., have warned that their earnings will be down from the first quarter of 1992.
One saving grace for the merchants is the fact that this is their least-significant quarter. Analysts say the stores remain conservative and are keeping their expenses and inventories lean.
Wal-Mart Stores Inc., the nation's largest retailer, said sales at stores open at least a year rose 6%, while business at all its 2,191 stores rose 22%.
Same-store sales are considered the most accurate assessment of how well a retailer is doing. The addition of stores or the closing of outlets can skew results.
Wal-Mart's sales remain below the double-digit increases it consistently reported in recent years.
Kmart Corp. said same-store sales rose 1%, while overall sales gained 10.5%.
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