Shoppers turning to discounters Department stores noticing a dip in consumer confidence

September sales picture

'It is perfectly OK not to go broke when buying a new coat'

Retail trends

October 09, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Consumers bypassed department stores and upscale specialty shops in favor of the big discounters in September, while some retailers began seeing signs of eroding consumer confidence.

The nation's biggest retailers reported mixed sales yesterday, though a penchant for bargains boosted sales at Wal-Mart Stores Inc. and Kmart Corp., helping the retail sector as a whole beat analysts' expectations for the month.

"We are seeing an increasing shift of spending dollars from the more conventional department stores to discount stores," said Kurt Barnard of Barnard's Retail Trend Report. "It is simply because household economics are not in the best shape. People are earning a lot of money, but they are spending" -- while not saving very much.

"People are beginning to be a little more cautious," he said. "It is perfectly OK not to go broke when buying a new coat or blouse."

According to the Bloomberg Composite Same-Store Sales Index, measure of 23 retailers, sales rose an average 5.23 percent in September, compared with the month a year ago. Department store sales dipped 0.89 percent, while discount store sales climbed 7.97 percent and specialty/apparel stores saw increases averaging 5.49 percent. Overall sales ended up slightly better than expected, said Kelly Armstrong, an analyst with Richmond, Va.-based Wheat First Butcher Singer. Armstrong's measure of 60 retailers showed a 5.4 percent sales increase.

"Wal-Mart, with a 9.5 percent increase, pulled that number up," Armstrong said. "But the results are all over the board. Some specialty retailers did extremely well and others didn't." Among specialty retailers, Gap Inc. posted a double-digit increase of 14 percent, which analysts attributed to the continuing strength of the lower-priced Old Navy division and heavy advertising of the popular khaki pants and jeans.

Wal-Mart, which reported that monthly sales jumped 9.5 percent to $12.4 million, led the way for the discounters, while sales at Kmart rose 5.6 percent. Discount store Dollar General posted an 8 percent gain, while Target's parent company, Dayton Hudson Corp., reported a 5.3 percent gain.

Kmart's chairman, Floyd Hall, called his company's results "on plan, with strength in home appliances and electronics partially offsetting slow fall apparel results due to unseasonably warm weather."

But weak sales of cold-weather apparel hurt department stores, such as J. C. Penney Co. Inc., Sears, Roebuck and Co. and Federated Department Stores Inc., which owns Macy's and Bloomingdale's. Sales for those companies fell by 6.6 percent, 1.7 percent and 0.7 percent, respectively. Only May Department Stores Co., the rapidly expanding parent of Hecht's and Lord & Taylor, broke the mold, reporting a sales increase of 4.3 percent.

"We're seeing a dip in consumer confidence, and the department store is the first to feel it," Armstrong said.

In September, the Labor Department reported the consumer confidence index at its weakest since October 1997.

Stock market declines appeared to have begun directly affecting more upscale retailers. Sales fell 1 percent at Saks and 7.1 percent at Neiman Marcus.

Many of the upscale retailers "are showing the effect of the global economic crisis and the decline of the stock market," Barnard said. "A lot of people that are accustomed to buying at Neiman Marcus feel a lot less rich."

Monthly retail sales

........................ Monthly .............. YTD

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

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

Circuit City ..... $694 ....... 11 ....... n/a ....... n/a

Dayton Hudson .. $2,511 ........ 5.3 .. $17,898 ........ 5

The Gap .......... $874 ....... 14 ..... $5,294 ....... 16

J. C. Penney ... $2.662 ....... -6.6 .. $18.869 ....... -1.5

Kmart .......... $2,857 ........ 5.6 .. $20,899 ........ 4.9

Kohl's Corp. ... $318.4 ........ 5.8 ... $2,114.5 ...... 9.6

The Limited .... $741.9 ........ 5 ..... $5,498 ........ 6

Lowe's ......... $1,160 ........ 4.1 ..... n/a ........ n/a

May Dept. Stores $1,160 ........ 4.3 ... $7,638 ........ 3.7

Sears .......... $2,650 ....... -1.7 .. $25,850 ........ 2.2

Wal-Mart ...... $12,383 ........ 9.5 .. $86,523 ......... 8.6

* In millions

Pub Date: 10/09/98

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.