Consumers are buying clothes, not the machines to wash them November sales show people are wary of big-debt appliances

December 06, 1996|By Liz Bowie | Liz Bowie,SUN STAFF

Consumers showed they were in the mood to spend money on clothes last month, but were unwilling to sink themselves further into debt to buy durable goods, such as major appliances and electronics.

Retail sales were mixed in November, with apparel stores showing increased sales over November 1995, but electronics stores such as Circuit City and Best Buy reporting declines.

"Santa's sleigh will be filled with apparel," said Kenneth Gassman, a retail analyst with Davenport & Co. in Richmond, Va.

The apparel industry had been knocked badly in the past two years by a lack of interest in clothing.

But November's sales show a change in the spending pattern, notably at department stores that base a major part of their earnings on apparel.

May Department Stores, owner of Hecht's, reported a 6.9 percent increase in November sales. The Federated Department Stores Inc., topped it with a 10 percent gain for the month. Federated owns Macy's and Bloomingdale's. J. C. Penney Co. Inc. said its same-store sales gained 7.7 percent last month.

"We are finding that a lot of people are willing to go out and buy gifts," said Kurt Barnard, president of Barnard's Retail Marketing. "But there is no question that they are watching their pennies."

On the down end, Circuit City and Best Buy both saw an 8 percent decline in sales when compared with November last year,.

Some analysts said, though, that comparisons with sales in November 1995 are difficult because Thanksgiving fell almost a week later this year. That pushes more sales into December.

"The only way to look at these months is to average December and November together," said Barnard.

Hechinger Company, the Landover-based home improvement retailer, showed a 5.9 percent decline in sales for the month to $161.8 million, compared with $171.9 million for the same period a year ago.

Sales at Hechinger stores that have been open at least a year -- a key gauge of performance -- dropped 2.9 percent for the month. October sales fell by 7.2 percent for all stores, and 9.6 percent for stores that have been open more than a year

The results showed an improvement from the previous month, said Richard S. Gross, Hechinger's senior vice president and controller. October sales fell by 7.2 percent for all stores, and 9.6 percent for stores that have been open more than a year. "We had a better month in kitchen and bath," he said. The company jTC had been offering a promotion that ended last month.

Nevertheless, he acknowledged the company is still feeling the effects of competition from Lowe's and Home Depot.

Analysts said debt is playing a big factor in consumer spending. While the stock market has given some people a bigger safety net and allowed them to spend more of their disposable income, others are hurt by debt.

Excluding mortgages, Americans now owe $1.2 trillion, including billion in credit card debt, said Barnard.

"Consumers are not willing to take on any more monthly payments," said Gassman, explaining why the big-ticket durable items, most often purchased on monthly payments, are not selling well.

In addition, analysts said, shoppers aren't tempted to upgrade their computers when they are only a year or two old.

But Barnard said he also believes that the computer industry has offered nothing new this Christmas.

Discount stores did not show the big gains of the department store chains.

For instance, Wal-Mart reported a 4 percent gain in same-store sales, and Kmart said its same-store sales increased 4.1 percent. Dayton Hudson Corp. had a 1.3 percent rise in same-store sales in November, including a 7 percent rise in its Target discount stores.

Monthly retail sales

OE.................................. Monthly ..................... YTD

............. Monthly ..........same-store ......YTD ......same-store

Company ..... sales* .........pct. change ... sales* ... pct. change

Best Buy ........ 767 ................ -8% .... 5,400 ........... NA

Circuit City .. 748.7 ................ -8% .... 5,250 ........... -7%

Dayton Hudson . 2,307 ............... 1.3% ... 19,161 .......... 3.6%

Gap ............. 484 ................. 1% ...4,100.0 ............ 5%

FHechinger ..... 161.8 .............. -2.9% .... 1,922 ........... -3%

J.C. Penney .. 1662.0 ............... 7.7% ... 12,419 .......... 2.2%

Kmart ........ 2,910 ............... 4.1% ..26,649.0 .......... 1.9%

FLimited ....... 783.2 ................. 4% .... 6,462 ............ 4%

Lowe's ........ 557.0 ................. 4% .... 674.5 ........... 17%

May Dept. Stores 1,131.0 ............ 6.9% .... 8,766 .......... 4.6%

Sears ...... .2,680.0 .............. -0.7% . 30,069.3 .......... 5.4%

Wal-Mart .... 9,350.0 ................. 4% . . 83,290 .......... 4.1%

*In thousands of dollars SOURCE: Bloomberg, company statements

Pub Date: 12/06/96

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