Retail sales climb 6.8% Some areas hurt by El Nino, but Gap, Wal-Mart surge


March 06, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Even retailers couldn't escape the reach of El Nino in February. Weather conditions helped boost sales in regions with unseasonably mild climates but dragged the numbers down in areas hardest hit by the weather phenomenon.

As spring-like temperatures drew consumers out to shop for lightweight clothing and home furnishings, monthly sales rose in most of the nation's stores, major retailers reported yesterday.

The average gain of 6.8 percent -- as measured by the Bloomberg composite same-store sales index -- beat analysts' estimates of about 5 percent.

Department store sales rose 3.49 percent, while sales climbed 6.17 percent at specialty apparel stores and 8.28 percent at discount stores, the index showed.

"In February, retail sales really got off to a very strong start, and it was pretty much across the board," said Kurt Barnard, president of Barnard's Retail Trend Report, based in Scotch Plains, N.J. "Apparel was a very, very strong seller, but home furnishings did as well as apparel."

Leading the way was Gap Inc., where same-store sales shot up 14 percent. Wal-Mart Stores Inc. posted same-store sales increases of 9.8 percent companywide and 11 percent in its Wal-Mart stores.

Sales there were driven by gardening and outdoor supplies as well as by T-shirts and socks, health and beauty aids and household cleaners.

"In general, the discount department stores were very good performers during the month," said Joseph Ronning, a retail analyst with Brown Brothers Harriman & Co.

That may be because as consumers put more of their income into the stock market, they have less discretionary spending money, Barnard said.

Price-conscious shoppers

"Consumers are willing to spend money, but they are looking for low prices -- a good assortment and a pleasant shopping experience -- but all of that under the umbrella of low prices," he said.

For instance, the Target stores division of Dayton Hudson Corp. showed a 4.9 percent increase for the month. Dayton Hudson officials said the company's $1.7 billion monthly sales met expectations.

And at Kmart Corp. -- which is seeing a turnaround in its once-weak women's apparel sales -- same-store sales rose 5.6 percent.

Demand for light-weight apparel kept the registers ringing at specialty retailers such as the Gap, Kohl's Corp., where sales rose 10.3 percent, and The Limited Inc., with comparable store sales increases of 4 percent.

But retailers took more of a hit if they had stores concentrated in areas hit hardest by El Nino, a periodic warming and air pressure change in the eastern Pacific Ocean that has altered weather worldwide.

Federated Department Stores Inc., which runs Macy's and Bloomingdales, said the heavy rains and flooding in California and twisters in central Florida hurt sales.

Federated, which counts on 35 percent of its sales from those states, reported increases of just 1.5 percent.

At J. C. Penney Co. Inc., sales rose just 1.1 percent, as the retailer continued concentrating on managing inventory and improving profit margins, analysts said.

Those retailers with sluggish sales in February should not be alarmed, Ronning said.

"It's one of the smallest months of the year," he said.

"What are you going to go shopping for in February? It's too early for spring. You're not going to go out there and buy short-sleeves."

Warning about future

One analyst warned that the second straight month of good sales for most retailers might not signal more of the same in the immediate future.

"I'm not sure how long this is going to hold on," said Skipp Briggs, a partner in retail consultants KMR Management Inc., predicting spillover at some point from the Asian financial crisis.

"If it's weather-related, it could be borrowing from late March and early April sales," he said.

"There's a lot of consumer debt. At some point, it's going to hit the fan. Clearly, it hasn't yet."

Monthly retail sales

.. .. .. .. .. .. ... .. .. .. .... .. .Monthly

Company.. .. .. .. Monthly.... .. ....same-str.

.. .. .. .. .. .. ..sales*.. . .. .. .Pct. chg.

Circuit City .. .. .$712.2 .. .. .. .. .. ..-2

Day. Hudson .. .. ..$1,772 .. .. .. .. .. .3.5

Gap .. .. .. .. .. ...$414 .. .. .. .. .. ..14

J. C. Penney .. .. ...$962 .. .. .. .. .. .1.1

Kmart .. .. .. .. ..$2,146 .. .. .. .. .. .5.6

Kohl's Corp. .. .. .$168.1 .. .. .. .. ...10.3

Limited .. .. .. ...$605.2 .. .. .. .. .. ...4

Lowe's .. .. .. .. .$712.0 .. .. .. .. .. .5.4

May Dept. Stores ...$788.6 .. .. .. .. .. .6.9

Sears .. .. .. .. ..$1,940 .. .. .. .. .. .4.7

Wal-Mart .. .. .. ..$9,097 .. .. .. .. .. ..11

* In millions

Pub Date: 3/06/98

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.