Consumers ignored rising interest rates and higher gasoline prices in February and shopped for household goods, electronics and spring fashions, boosting sales at the nations biggest chain stores.
Retailers largely met or exceeded expectations for the month, typically a lackluster selling period between post-holiday sales and spring.
But the booming economy that gave retailers a banner 1999 continued to fuel brisk spending, analysts said yesterday, as retailers reported their monthly sales.
Sales were exceptionally good across the board, for most players, said Kurt Barnard, president of Barnards Retail Trend Report in Upper Montclair, N.J. If you were a retailer in February and did not do well, you stuck out like a sore thumb.
The strong showing was especially impressive when compared with a strong performance in February 1999, which many retailers beat, he said.
The strong performance signals the continuing momentum of the U.S. economy, with high consumer confidence, low unemployment and robust personal income gains, said William Ford, senior economic advisor for TeleCheck, which tracks spending by check at stores.
An industry-wide tally of retailers showed chain store sales posting a strong 5.6 percent gain for the month, according to the Bank of Tokyo-Mitsubishi. That beat the banks prediction of 4 percent to 4.5 percent.
By category, sales rose 5.9 percent at apparel chains, 5.5 percent at discount stores, 8.8 percent at wholesale clubs, 2.7 percent at department stores and 15.1 percent at furniture chain stores compared with the corresponding period last year.
Industry leader Wal-Mart Stores Inc. posted a solid 6.1 percent gain. Sales rose 6 percent at the Limited, the biggest U.S. apparel chain; 5.3 percent at Federated Department Stores Inc.; 3.6 percent at the May Department Stores Co.; and 3.1 percent at Sears, Roebuck and Co.
Department store chains such as Federated benefited from a good consumer response to the early spring merchandise, said Jeff Edelman, a retail analyst with PaineWebber in New York.
Helping to drive up the industrywide averages were steep increases for some luxury and specialty merchants. Neiman Marcus Group Inc. saw sales surge 11 percent, and Saks Inc. reported an 8 percent gain, beating expectations. Talbots Inc., the womens apparel retailer, topped forecasts with a 20 percent increase, much of it due to exceptional sales of regular-price spring merchandise, the company said. That means the chain wasnt forced to discount its inventory.
Federal Reserve Chairman Alan Greenspan said last week that interest rates must rise to chill economic expansion and stave off inflation. The central banks policy-making arm, the Federal Open Market Committee, has raised short-term interest rates four times since late June.
But experts believe that it will take longer for higher short-term rates to filter down to the consumer and dampen spending enthusiasm.
It seems the consumer has largely dismissed those issues, said Michael P. Niemira, a vice president of Bank of Tokyo-Mitsubishi. Maybe the broader issue is inflation has not turned much higher, and the fundamentals on the employment side continue to remain strong.
Household durable goods and consumer electronics continued to be key drivers of demand last month, Niemira said.
Kmart Corp., which reported a 2.7 percent gain in sales, noted that home appliances, housewares, electronics and home decor ranked as the top categories. Despite that demand, February sales came in slightly below expectations because of continued cooler weather in the South, said Floyd Hall, Kmarts chairman, president and chief executive officer.
But the overall sales pace is likely to slow this month to between 3 percent and 4 percent, Niemira warned. Easter falls at the end of April, later than last year, which could hurt March sales.