Friday, March 09, 2001

Spring forecast cloudy for retail

The Associated Press and The Cincinnati Enquirer

        NEW YORK — The outlook for a solid spring season grew more uncertain for the nation's big retailers Thursday as they reported generally disappointing results for February.

        While many value-oriented retailers and some clothing stores, such as Talbots Inc., posted healthy results, other merchants, most notably apparel chains and department stores including Federated Department Stores of Cincinnati, languished amid weakening consumer spending.

        At Federated, sales at stores open at least one year fell 1.6 percent in February, the company said Thursday. Total sales were down 5.1 percent to $1.15 billion, because of a 45-percent drop in sales at the company's Fingerhut catalog and Internet sales unit.

    February same-store sales reported by leading retailers (sales compare the current year's sales with those of the previous year):
    • Wal-Mart Stores, up 4.3 percent.
    • Kmart, up 3.3 percent.
    • Sears, Roebuck and Co., down 2 percent (domestic stores only).
    • Target, up 1.5 percent.
    • J.C. Penney, down 2.1 percent (J.C. Penney stores only).
        Analysts said inclement weather hurt sales, but they emphasized that the results showed clearly that consumers, who have been spending cautiously since June, continue to retrench.

        “February gives us a window to how strong sales growth is likely to be this year. And it's not a very upbeat picture,” said Michael P. Niemera, vice president of Bank of Tokyo-Mitsubishi Ltd. “Demand is clearly slowing.”

        He said this was the largest number of stores he has seen reporting declines since July 1996.

        The Bank of Tokyo-Mitsubishi index, which tracks sales at about 80 stores, rose a modest 2.8 percent last month from February 2000, when the index gained 6.0 percent. From January through February, the index rose 3.8 percent, compared with 5.85 percent in the same period last year.

        John Morris, an analyst at Gerard Klauer Mattison, said some specialty stores that have long been struggling actually benefited last month from having a lot of leftover winter merchandise for the bargain-hungry shopper. One example, he said, was Abercrombie & Fitch, which reported a robust 6 percent increase, beating Wall Street expectations.

        “Not many people were buying spring merchandise.”

        February is not a major contributor to retailers' profits, but it “shows the direction of where the consumer is going,” said Jeff Feiner, managing director at Lehman Brothers. Stock market volatility and high energy prices continue to worry Americans, and their confidence as measured by The Conference Board fell in February to its lowest level in more than four years.

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