Many Retailers Hurt by War Buildup

Wal-Mart Stores Inc., J.C. Penney Co. and other U.S. retailers said sales slumped in March as shoppers curbed spending because of the war in Iraq, forcing some merchants to reduce profit forecasts.

Yet California companies Gap Inc. and Pacific Sunwear of California Inc. were among the few retailers reporting solid sales gains.

Sales at Wal-Mart stores open at least a year rose 0.7% from a year earlier, the discount retailer’s smallest monthly gain in more than two years. Sales at J.C. Penney’s department stores dropped 5.5%.

Target Corp., Barnes & Noble Inc. and Penney were among retailers saying that profit will be less than forecast or that they would have losses because of the disappointing sales. Many chains said it was difficult to forecast April sales because of the war, consumer concerns about the economy and Easter falling three weeks later than last year.

“People focused on the war throughout March,” said Brian Slater, who helps manage $400 million for Condor Capital Management, which owns about 58,900 Wal-Mart shares. “They weren’t out shopping.”

The number of shoppers and average purchase size at Wal-Mart fell during the first full week of the war. Traffic dropped at May Department Stores Co. the day after the fighting started. Federated Department Stores Inc., parent of Macy’s and Bloomingdale’s, has said sales were within expectations until the conflict began.

U.S. retailers’ sales at stores open at least a year fell 0.2% in March, according to Bank of Tokyo-Mitsubishi Ltd. economist Michael Niemira, who tracks results from more than 80 chains.

March sales probably were 1% to 2% lower because Easter, when shoppers buy spring outfits and candy, falls on April 20 compared with March 31 last year.

San Francisco-based Gap, the largest U.S. clothing store chain that operates Gap, Banana Republic and Old Navy stores, said sales rose 9%.

Teen retailer Pacific Sunwear of Anaheim reported same-store sales up 9.5%, beating analysts’ forecasts of a 5.5% gain.