Stronger retail sales offer hope for recovery

January 14, 1992|By Thomas Easton | Thomas Easton,New York Bureau of The Sun Michael Dresser of The Sun's Business staff contributed to this article.

NEW YORK PHC OBB — NEW YORK -- January began with stronger sales for many retailers, giving faint signs of hope that this year's results may improve slightly over a horrendous 1991.

"The last two and one-half weeks have been very good, not just for us but also for others," Joseph Antonini, chief executive of K mart Corp., said yesterday in opening comments at the National Retail Federation's annual conference in New York.

The event drew an estimated 15,000 people, up 16 percent from last year but still below the peak achieved in 1989, the federation said.

Echoing Mr. Antonini's comments, Arnold Aronson, chief executive of Woodward & Lothrop/John Wanamaker, said sales were ahead of the pace of last year, when business was hit hard by the imminent Persian Gulf war. The better activity was more evident in the Philadelphia and Delaware operations than in the Washington, D.C., area, he added.

Still, with the new year just beginning, Michael Sullivan, chief executive of Towson-based Merry-Go-Round Enterprises, said retailers may undermine their own sales by taking an overly cautious approach. "If you already have it, you are not going to buy it," he commented. "In tough times, we tend to get too conservative."

And tough times abound. Yesterday's modestly upbeat reports emerged during an extraordinarily difficult time for the industry. The government will report December retail sales today, and the results will be anemic at best and possibly down, concluding the industry's fourth successive bad year. This weekend, R. H. Macy's disclosed delays of two weeks in paying its vendors the debts that in better times would be covered by an abundance of cash from Christmas sales.

In the past 18 months, retailers have shed over 600,000 employees out of a work force of nearly 20 million, said Carl Steadtman, economist with Management Horizons, an Ohio retail consultant. Bankruptcies have engulfed 20 percent of all department stores and 14 percent of discounters. Retailers "are out of the recession because we're in a depression," he said.

With the exception of a handful of extraordinarily successful and growing retailers, such as The Gap, Walmart, Home Depot and the like, "it's hard to be optimistic," Mr. Steadtman said.

Maryland, however, received an unexpected ray of hope for its sickly retail sector. Sales tax receipts for November 1991, the most current data available, came in 1.4 percent higher than in the same month of 1990, a state government spokesman said yesterday. It was the first month-to-month increase since a tiny gain in May and only the second since September 1990.

"Hopefully, we're beginning to see some modicum of a turnaround," said Marvin Bond, a spokesman for the Maryland comptroller's office. He noted, however, that November's sales tax receipts were being compared with a very weak 1990 figure.

Thomas Saquella, president of the Maryland Retail Merchants Association, said his sense was that retail sales for December were running even with or slightly ahead of December 1990. He said sales could possibly have been up as much as 2 percent. Sales tax figures for December will not be available until later this month.

Overall, though, 1992 should "certainly be better than 1991," said Allan Sinai, chief economist for the Boston Co., initially because the comparisons with the depressed first half of last year will be easy, and then because a recovery should take hold.

Others were also encouraged and suggested that industry-wide sales may grow modestly as several years of restrained purchases build demand and low inflation maintains the purchasing power of family incomes.

Tempering any optimism, though, were comments made by both retailers and economists concerning the fragile psyche of the country. Richard Curtin, director of the bellwether surveys of consumer confidence at the University of Michigan, said potential customers were restrained by a "consistent and deep-seated" fear of unemployment, as well as long-term apprehension concerning the ability of the United States to remain competitive.

Recent moves by the government to reduce interest rates will help, particularly in areas such as home furnishings and other large items which accompany home sales, Mr. Curtin said. But the overall impact is expected to be modest.

In contrast to the subdued outlook for retailers selling to others, optimism appeared widespread among the 640 exhibitors attempting to sell to them. Many offered computerized tracking and scanning equipment. Mr. Antonini noted that K mart had invested $1 billion in new technology, and Sears, Roebuck and Co. last week announced a huge investment in new, labor-saving electronics to enhance productivity.

Interspersed with the high technology vendors were some distinctly low-tech companies doing equally well. Johnny Jackelow of Boss Security Systems, for instance, said sales were booming for his locking hangers costing up to $15 a piece, or 50 times the cost of an ordinary plastic one.

"In eight months since I started the business I've sold a hundred thousand of these," he said. "You have to understand, shoplifting is the country's fastest-growing crime."

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