Sales at many stores flat, despite big crowds

December 04, 1992|By Michael Dresser | Michael Dresser,Staff Writer

Consumers and retailers played a waiting game in November as strong traffic yielded meager sales results.

Many merchants announced yesterday that sales declined or were nearly flat in November in those stores also open last year. Few even came close to the double-digit increases that were common in this year's better months.

Even mighty Wal-Mart Stores, where double-digit comparable-store increases are a way of life, recorded only a 7 percent increase. Among the large retailers posting declines in same-store sales were Kmart Corp., Melville Corp. and Woolworth Corp.

While the November numbers were disappointing, there were no signs that merchants are panicking. With consumer confidence rising and robust sales since Thanksgiving, retailers have visions of sugar plums dancing in their heads as they look at December.

Many analysts are predicting sales gains this holiday season of 6 percent and more over last year's dismal performance.

Profitability could be even stronger, they say, because retailers aren't cutting prices as frantically as they did last year.

Otto Grote, a veteran retail analyst with Derby Securities in New York, compared this season's retail market to poker.

"It's a game. The consumer goes in there and says if these people don't drop their price, I'm not going to buy," Mr. Grote said. "It's a question of who panics first. The retailers this year feel a little more confident in their hand."

Mr. Grote said he's betting on the merchants.

"I think the sales will be fine but the earnings will be great," he said."From a consumer's point of view, it's not going to be such a great Christmas because they're going to have to pay up."

Orren Knauer, Kmart's director of investor relations, confirmed Mr. Grote's analysis where his company was concerned. He said one reason Kmart's same-store sales declined was that it did not offer the deep markdowns it did last year.

"We felt that we wanted to be more profitable this Christmas season than last year and one way to do that is to be less promotional," Mr. Knauer said. He added that Kmart was expecting a 4 percent to 5 percent increase in comparable store sales in December even with fewer markdowns.

Kmart also lost sales because of unusually warm weather during the first two weeks of November, Mr. Knauer said. The declines cut across many industry categories, with all of Kmart's specialty retail companies -- from Sports Authority to Waldenbooks to Builders Square -- showing lower comparable store sales gains in November than for the year to date.

Unlike many retailers, Kmart ended its November reporting periodbefore Thanksgiving weekend, a period of solid gains for many other retailers.

Among the nation's largest retailers, the strongest November performance came at Limited Inc., where same-store sales rose 8 percent. Caldor Corp. continued its comeback story with an impressive 7.6 percent gain. And Federated Department Stores Inc., recently emerged from Chapter 11 bankruptcy, showed a solid 5.3 percent increase.

J. C. Penney Co. Inc., which has been racking up double-digit gains for much of the year, settled back to a respectable 5.1 percent gain over a strong November 1991. Sears, Roebuck and Co., with a new management team in charge of its merchandising division, rebounded from a scandal in its auto repair business to show a 5.1 percent increase.

At May Department Stores Co., parent of Hecht's, same-store sales were up a middling 3.8 percent.

Among Maryland-based companies, Hechinger Co. showed a 4 percent gain and Merry-Go-Round Enterprises Inc. recorded a 2 percent gain in comparable-store sales, both results that analysts characterized as unimpressive but reasonable.

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