July was mixed bag for retail sales Discount stores strong, but other chains suffer

August 07, 1992|By Michael Dresser | Michael Dresser,Staff Writer

July was a discount month for U.S. retailers.

Overall, the monthly sales reports issued yesterday by the nation's leading retailers were a mixed bag. Many companies showed strong gains when compared with July 1991, while many others showed decidedly weak results. Few were bunched in the middle.

For the discount sector, however, July's sales were cause for celebration as consumers demonstrated they were willing to buy -- but only if the price was right.

Wal-Mart Stores, the nation's leading retailer, returned to double digits with a 13 percent gain in sales at stores that have been open at least a year. That figure, known as comparable-store sales, is regarded as a better measure of a retailer's performance than total sales.

Kmart Corp., the No. 2 retailer, posted a 7.5 percent increase in comparable-store sales, its best gain since May 1991. Caldor Corp. recorded a 10.7 percent gain.

"The discounters in the right companies are booming, and I don't see any reason that shouldn't continue," said Otto Grote, an analyst at Derby Securities who specializes in off-price retailers.

Deep-discount retailers such as Family Dollar, up 16 percent, and value-oriented specialty companies such as Charming Shoppes, up 12 percent, also posted strong gains.

Two Maryland-based companies apparently benefited from the increased consumer emphasis on value. Landover-based Hechinger Co., which recently cut its prices, recorded its second straight month with a 12 percent gain in same-store sales. Savage-based Cosmetics Center showed a 13.6 percent increase.

Joseph Ronning, an analyst for Brown Brothers Harriman, agreed that July was good to discounters but noted that the month is traditionally a slow period that retail industry experts hesitate to use as an indicator of economic trends.

"July is a transition month as you clean up your summer stuff and make way for your back-to-school stuff," he said. Some of the increased July sales could be attributed to promotions to make up for slow business in May and June, he said.

Department store chains did not fare nearly as well as discounters.

No. 3 retailer Sears, Roebuck and Co., still reeling from reports of widespread abuses in its automotive centers, reported that its merchandise group's comparable-store sales dropped 2.2 percent.

May Department Stores Co., parent of Hecht's, recorded a middling 3.9 percent gain.

The bright light among department stores was J.C. Penney, which has had strong comparable-store sales gains this year. Analysts attributed the 9.7 percent July gain to its increased emphasis on value.

Results among specialty apparel merchants were generally weak, with the exception of Bensalem, Pa.-based Charming Shoppes. The Limited Inc., had a particularly rough month, posting a 6 percent decline.

Merry-Go-Round Enterprises, a clothing chain based in Joppa, reported a lackluster 2 percent gain in comparable store sales against a weak July 1991, but the positive figure was a victory of sorts for a chain that posted declines in five of the seven previous months.

Hechinger spokesman Rick Gross said the home-improvement company was cheered by the July sales gain, but he said price cuts will put pressure on the bottom line.

"It's coming a little bit at the expense of gross margins," he said, adding that the company will be "pleased" if it can report flat earnings for its just-ended second quarter.

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