Friday, February 08, 2002

Sales, discounts lured buyers

By The Associated Press
and Cincinnati Enquirer

        NEW YORK — Deep discounting of winter merchandise lured consumers into the nation's stores during January, offering struggling retailers a brief respite from a sluggish sales trend.

        While analysts see the sales gains announced Thursday as encouraging, they don't think the consumer is ready to splurge. Economic uncertainty continues to drive consumers into Wal-Mart Stores Inc., wholesale clubs and other moderate-price stores, which again outperformed the rest of the retail industry during January.

    January same-store sales reported by the five largest retailers (sales compare the current year's sales with those of the previous year at stores open at least a year):
    • Wal-Mart Stores, up 8.3 percent.
    • Target, up 5.8 percent.
    • Kmart, no report; filed for bankruptcy protection in January.
    • J.C. Penney, up 5.9 percent (J.C. Penney stores only).
    • Sears, Roebuck and Co., down 3.4 percent (domestic stores only).
        Department stores, particularly May Department Stores Inc., and apparel chains including Gap Inc., are still struggling, although the sales declines for many weren't as deep as Wall Street expected.

        Cincinnati's Federated Department Stores said sales fell 8.8 percent last month in stores open at least one year.

        The four-week period that ended Feb. 2 capped a quarter in which the retailer's same-store sales fell 6 percent. The company's fiscal year ended Feb. 2 with a 5.3 percent decline in same-store sales.

        Counting all stores, Federated generated $827 million in sales last month, compared with $1.1 billion in the year-ago period that contained an extra week in the retail calendar. Federated ended the year with $16.9 billion in sales, down from $18.4 million in the 53-week fiscal 2000.

        Dayton-based Elder Beerman Stores said January same-store sales fell 4.7 percent compared with January 2000.

        “This may be a signal that the end of the recession is near. The weakness wasn't as bad in some areas as we have seen,” said Michael Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. But, he cautioned, “January is not representative” of consumer spending trends because it is a time when merchants clear out inventory and make room for spring goods.

        Other analysts were also wary:

        • “Consumers came out in response to the great values in the stores, but are they willing to pay regular price for spring (merchandise)? It is tough to say,” said Richard Jaffe, an analyst at UBS Warburg.

        • “Americans are not yet ready to go on spending sprees and buying binges, particularly at department stores,” said Kurt Barnard, president of Barnard's Retail Trend Report, based in Montclair, N.J. “They are willing to spend — if the prices are real bargains.”

        Wal-Mart posted an 8.3 percent gain in same-store sales, exceeding its own projections and Wall Street estimates. The company announced fiscal 2001 sales of $219 billion, securing its place as the world's largest company.


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