Retail Sales Languish, Report Says
Sales at Sears Roebuck & Co., Barnes & Noble and some other major retail chains fell 50% or more on the day of the terrorist strikes, leading to the second-biggest weekly drop-off for retailers this year, according to a report released Tuesday.
But Wal-Mart Stores Inc., the nation’s largest retailer, was relatively unscathed. And by the weekend, its sales showed a big increase, apparently boosted by consumers rushing to buy emergency provisions.
In one of the first quantitative overviews of the loss to retailers from the Sept. 11 attacks, Bank of Tokyo-Mitsubishi Ltd. said sales at retail stores open at least a year dropped 1.4% from the previous week. Although that number appears small, Bank of Tokyo analyst Michael P. Niemira called it a “huge decline by historical parallels.” It was the weakest performance this year since a sales drop-off in late March that was attributed to poor weather.
“The only thing that prevented it from being more negative is consumers buying basically on fear, buying food, buying candles, buying propane tanks,” Niemira said.
What’s more, a separate report showed that mall traffic around the country plunged by more than 65% on Sept. 11, when many malls and stores did not open or were closed early. Shoppers reappeared the next day, some seeking relief from the tragedy. But traffic overall, which had been waning in recent months, slid 14% for the week compared with a year earlier, according to RCT, a Chicago-based industry consultant.
If retail sales continue to languish, that could push the country into recession. Consumer spending constitutes about two-thirds of the U.S. economy, and it remains to be seen whether consumers will hunker down.
Based on the data from last week, Bank of Tokyo shaved as much as 50% off its previously projected sales growth for September at stores open at least a year, a key industry measure. Retail analysts also have been cutting forecasts for the rest of the year.
Frank Bedillo, senior retail economist at PricewaterhouseCoopers, said he now expects a mere 1.5% increase in retail sales for the fourth quarter, a full percentage point below his estimate before the attacks.
Over the last three months, TeleCheck Services Inc. has been reporting a comparable-store sales increase of 2% to 3%, barely enough to cover inflation. And September figures to be worse.
But one poll released Tuesday, by ABC/Money Magazine, showed consumer confidence rose slightly in the latest week, despite the terrorist attack. And among retailers that held up well last week was Wal-Mart. The Arkansas-based discount retailer’s same-store sales fell a comparatively small 10% on Sept. 11 and by the weekend were up 8%, according to Bank of Tokyo.
Many department stores and specialty apparel retailers didn’t fare as well, and they appear more vulnerable heading into the holidays because the products they sell are more discretionary.
Joe Teklits, an analyst for First Union Securities who monitors specialty retailers, said Tuesday that even those that held up fairly well last week were worried about future business. “Everyone we spoke with is looking to cancel holiday or spring orders,” he said.
In the last couple of days, First Union has reduced earnings estimates for a string of specialty retailers, including Abercrombie & Fitch Co., Gap Inc., Pacific Sunwear of California, Vans Inc. and Quiksilver Inc. Teklits said the next week or two would provide more telling signs about prospects for the remainder of the year.
