Discount, specialty stores do well Department stores, such as Sears, report sales decline in Oct.

Retail sales

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

Consumers went shopping at specialty stores and discounters in October, handing a blow to department store chains that have been losing customers.

Reports on October sales from the nation's biggest retailers yesterday showed mixed results, amid concerns over Wall Street volatility and signs of an economic slowdown.

"The sales that are coming through today suggest that consumers in October may have tightened their purse strings," said Kenneth Gassman, a retail analyst with Devenport & Co. of Richmond, Va.

Compared to October 1997, sales last month were off 2.8 percent at J. C. Penney Co. Inc., and were off 1.9 percent at both Sears, Roebuck and Co. and Federated Department Stores Inc., which owns Macy's.

Specialty shops the Gap Inc. and Talbots posted better-than-expected gains -- 18 percent and 26 percent, respectively -- driven by strong demand for apparel.

Discounters Wal-Mart Stores Inc., up 8 percent; Kmart Corp., up 4 percent; and Target, a division of Dayton Hudson Corp., up 4.2 percent, continued to exceed their 1997 levels.

At Circuit City, home office and wireless communications products helped drive the electronics retailer's same-store sales up 7 percent.

Overall retailing results -- a moderate rise -- left analysts less than impressed.

"The sales are uneven," Gassman said.

"The Gap had hot merchandise," such as heavily advertised khakis and jeans as well as merchandise in its lower-priced Old Navy division, he said.

"But if you didn't have something consumers just really had to have, your sales results for October were soft."

For the first six months of the year, strong employment left consumers with money to spend. But consumer confidence, an indicator of spending habits, fell last month to its lowest level since December 1996, the Conference Board reported.

Retailers have since tempered their initially high expectations for the critical holiday shopping season, and analysts are now predicting more moderate gains over last year, in the 2 percent to 4 percent range.

Still, the October results appeared on target to some.

"October was not much different from what's been happening all year," said John Konarski, vice president of the International Council of Shopping Centers. "Discounters are having a great year. And if you look at the stores that are really catering to the teens -- and to families -- they're doing great."

Too much emphasis has been placed on declines in consumer confidence, he said.

"The bottom line is, things are still good," Konarski said, noting that weekly wages rose more than inflation in October. "What consumer confidence affects is durables, like refrigerators. Soft goods are not affected."

In Maryland, retailers began seeing sales start to pick up during the final week of October, said Tom Saquella, president of the Maryland Retailers Association.

"Despite problems with the global economy in the third quarter, consumer confidence is still high by historical standards," he said.

Monthly retail sales

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

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

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

Circuit City ............$663.9 ........7 .......N/A ........N/A

Dayton Hudson .........$2,214.. ........2.3 ...$20,112 ......4.7

The Gap ..... ...........$731.. .......18 ......$6,025. ....16

J.C. Penney ...............$2.5. ..... -2.8 ...$21,354 .....-1.7

Kmart .................$2,374.......... 4 .....$23,273. .....4.8

Kohl's Corp. ............$277.7 ........3.7 ....$2,392.2 ....8.8

The Limited .............$593.5 ........3 ......$6,091. .....6

Lowe's ..................$924.2 ........5 ......$ N/A .......N/A

May Dept. Stores ........$932. .........2.8 ....$8,570.1 ....3.6

Sears .................$2,190. ........-1.9 ....$N/A ........1.7

Wal-Mart .............$10,384 ..........8 .....$96,907. .....9

* In millions

Pub Date: 11/06/98

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