Discounters Help Sales Once Again

Shoppers chose Wal-Mart Stores Inc. and other value-priced retailers after the terrorist attacks, stocking up on basic goods in September and steering clear of many discretionary purchases, according to retailers’ monthly sales reports released Thursday.

Many retailers and analysts said this back-to-basics pattern could continue into next year.

The demand for consumables was a particular boon to Wal-Mart, which posted a better-than-expected sales gain for September of 6.3% over the year-ago month, for stores open at least a year.

Strength at Wal-Mart, the world’s largest retailer, also helped balance dismal reports by many other retailers and kept the industry’s overall September sales results from slipping into negative territory.

Other discounters and value-price merchants also emerged as post-attack winners. Family Dollar Stores Inc. posted a 6.7% gain in same-store sales, Dollar General Corp. rose 9%, J.C. Penney Co. added 8.1% and Kohl’s Corp. and Costco Wholesale Corp. both rose 4%.

And while other specialty retailers warned about continued weakness and margin pressures, women’s clothing seller Chico’s FAS Inc. reported a 1.1% gain, following a pattern of strong sales all year. Chico’s stock rose $1.35 Thursday to close at $34.45 on the New York Stock Exchange.

May Department Stores Co., with a 10.9% decline, and Federated Department Stores Inc., with a 12.9% drop, still performed better than expected. Federated’s stock gained $2.12, or more than 7%, closing at $31.60 on the Big Board. Shares in May rose almost 9%, gaining $2.71 to close at $33.56 on the NYSE.

Same-store sales, or sales from stores open at least a year, are considered an important measure of a company’s overall health because the number excludes new and closed stores.

As expected, department stores, specialty apparel sellers and luxury goods merchants took the biggest hit in same-store sales compared with the year-ago month, with Saks Inc. down 11.5%, Gap Inc. off 17% and Neiman Marcus Group Inc. falling 19.5%.

Still, analysts and others said they hesitate to draw too many conclusions from last month’s data, especially given the sluggish sales growth overall during much of the previous 18 months.

“Unfortunately, we learn almost nothing from September because the attack so distorted trends,” said Matt Fassler, an analyst with Goldman Sachs in New York. “We did see signs of the resilience of the American consumer--not because spending growth is strong, which it isn’t, but because consumers did not crawl into a cocoon after the attacks and felt like they had the resources to continue to spend.”

For the year, Goldman Sachs is maintaining estimates of between 0% and 2% overall retail sales growth, with continued weakness into the first half of next year.

Other watchers note, however, that as job losses mount, consumers are likely to continue trying to stretch their money at discount stores.

“What happened in recessions past is that consumers become more price-oriented and you get a down-market shift,” said Carl Steidtmann, chief economist for Deloitte Research. “The tragedy of Sept. 11 just accelerated that.”

For September, Goldman Sachs tallied zero growth overall in retail sales, the worst performance since 1995, although slightly better than the firm anticipated.

Among stores it tracks, Salomon Smith Barney pegged the industry’s September gain at 0.5%. Bank of Tokyo-Mitsubishi, in its survey of chain stores, calculated a sales gain of 0.8% over the same time last year.

Bank of Tokyo-Mitsubishi pegged Wal-Mart’s contribution to its overall chain store sales index at 2.8%, meaning that excluding Wal-Mart, retail sales overall fell 2%. More than half, or 48 of the 78 stores Tokyo-Mitsubishi tracks, posted negative same-store sales.

Despite its good news, Wal-Mart stock fell 14 cents Thursday to close at $53.49 on the NYSE.