Retailers Report Lackluster Sales for June : Indicators: Worries over a slowing economy kept consumers away, even with heavy markdowns.
The nation’s leading retailers Thursday reported disappointing sales increases for June, as cautious consumers kept a tight rein on spending amid signs of a cooling economy.
Consumers shied away from apparel and discount stores in June, leaving the nation’s biggest retailers with generally disappointing sales for the month.
The figures announced Thursday, coupled with the Commerce Department’s report of a decline in its main economic forecasting gauge, were the latest in a litany of reports indicating that consumer spending and the economy as a whole are slowing.
Hours after the results were released, the Federal Reserve Board said it was nudging interest rates down a quarter of a percentage point. But the move was unlikely to prompt consumers to begin shopping freely any time soon.
Overall, June’s numbers were “pretty disappointing,” said Karen Sack, a retail industry analyst with Standard & Poor’s Corp. “There are some good numbers, but generally sales remain weak.”
She said retailers brought business in by heavily marking down prices, which will mean disappointing second-quarter profits for some companies. Dayton Hudson Corp., whose Mervyn’s clothing stores have been struggling, warned that its second-quarter earnings will fall from year-earlier levels.
Many other apparel retailers had a tough time last month. Ann Taylor Inc., which sells upscale women’s clothes, said sales fell and predicted it will announce a loss for the quarter. Gap Inc. also said sales were down.
But some apparel retailers fared well. Talbots Inc., which also caters to upscale shoppers, had strong results.
Discount store results were mixed, with Kmart Corp. showing some improvement and Wal-Mart Stores Inc., the nation’s largest retailer, announcing lackluster sales.
Consumers, who grew increasingly frugal during the 1990-91 recession, remained cautious even when the economy improved. Now, with the economy slowing again, they are cutting back even further on items they don’t really need. And since the economy is dependent on consumer spending for growth, the renewed caution was likely to further slow the nation’s business activity. Analysts said retailers were unlikely to see a rush of business from Thursday’s rate cut.
The Salomon Bros. retail index, the investment firm’s barometer of sales performance, rose 3.4% after a 4.2% gain in May. In June, 1994, the index rose 5.8%.
Wal-Mart said sales from stores open at least a year, or same-store sales, rose 4.5% from June, 1994, while total sales were up 13.8%. The numbers were off from Wal-Mart’s pace in the past.
Same-store sales are considered the most accurate measure of a retailer’s strength. They exclude the results of newer stores, where sales tend to be unusually high. Same-store sales also exclude results from stores closed over the past year.
Sears said its same-store sales rose 4.3% and that overall sales rose 4.7%. Kmart said same-store sales rose 5%, while overall business was up 6.5%. Dayton Hudson said same-store sales rose 2.3% and that overall business rose 7.9%.
Los Angeles-based Broadway Stores Inc. said total June sales fell 3.4% from a year ago and that same-store results fell 4.8%.
J.C. Penney Co. said same-store sales at its flagship stores rose 0.7% and that total sales, including its drugstore and catalogue operations, rose 3.4%. Penney said consumer demand was weak on the East and West coasts and along the U.S.-Mexico border.
