Upbeat Retail Data Fail to Lift Stocks

Several retailers, including Sears, Roebuck & Co. and Kohl’s Corp., reported increases in a key gauge of sales Wednesday, but retail stocks fell on fresh worries that consumers remain cautious about spending.

“I think the big concern on the part of investors is that the onslaught of continued job layoffs will adversely affect spending at the retail level,” said Jeffrey Feiner, retail analyst at Lehman Bros.

Most major retailers are expected to report today on sales at stores open at least a year, referred to as same-store sales. Investors are closely watching August sales, searching for signs that consumers are still spending despite the sluggish U.S. economy. Consumer spending accounts for two-thirds of all economic activity.

Tax-rebate dollars and back-to-school sales are expected to help lift August sales somewhat, although an executive from the world’s largest retailer, Wal-Mart Stores Inc., said Wednesday that rebate dollars had not had “an overly significant” effect on sales since the first checks were mailed in July.

Wal-Mart, which will cash tax-rebate checks in its stores, said it saw sales increases mostly on high-price but low-margin items such as televisions and computers.

In mid-August, Home Depot Inc., the world’s largest home improvement retailer, reported “modest results” from its offer to cash consumers’ tax-rebate checks.

In the sales data reported Wednesday, discount chains such as Kohl’s and Costco Wholesale Corp. turned in better numbers than Sears. Discounters’ sales have been propped up by purchases of items such as food and household cleaners, while department store sales have stagnated in recent months.

“I think we’re still likely to see flat to negative numbers out of the department stores, while the discounters should look OK,” said Jeff Stinson, retail analyst with Midwest Research.

Sears, the No. 4 U.S. retailer, said same-store sales rose 0.2% in August from a year earlier, exceeding company forecasts for a small sales decline. The company noted strength in appliances and home decor items in its department stores.

Costco said its same-store sales rose 4%. Analysts had expected Costco to report same-store sales increases of 4% to 6%.

Kohl’s, which offers name-brand apparel and home goods at low prices, said same-store sales rose 4.9%. Wall Street analysts had expected Kohl’s same-store sales to rise about 4% to 6%, with some estimates ranging as high as 8%.

“We are pleased with the start of the back-to-school buying season, which spans both August and September,” Kohl’s Chief Executive Larry Montgomery said.

At Hot Topic Inc., based in Industry, same-store sales rose 9.7%. That compares with an 18% increase in August 2000.

Retail stocks have been riding a roller coaster all year, alternately rising and falling as investors digested the most recent sales data. Wall Street had a mostly negative reaction to the sales reports Wednesday. The Standard & Poor’s retail index of 35 stocks fell 0.3%. Sears fell 37 cents to $42.95, and Kohl’s lost $2.25 to $53.60, both on the New York Stock Exchange. Costco lost 45 cents to $37.21 in Nasdaq trading.

On the upside, Hot Topic gained 35 cents to $33 on Nasdaq, and Wal-Mart added 70 cents to $49.15 on the NYSE.