Weather blamed for sales shortfall

Big chains produced 7.9% rise, falling below projections

Retail

May 05, 2000|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The Easter holiday gave retailers a smaller-than-expected boost in April, with cool weather hurting demand for spring and summer goods.

Sales at the nation's biggest chain stores rose an average 7.9 percent, according to the Bank of Tokyo-Mitsubishi in New York.

That's less than the 8 percent to 9 percent analysts had projected because Easter fell later in April. The later holiday was expected to pull from March sales and pump up retailers' performance last month.

Though few companies saw sales drop, compared with April 1999, several said they fell short of sales projections, including Kmart Corp., Federated Department Stores Inc. and Sears, Roebuck and Co.

Sales dipped 0.8 percent at Kmart, and the retailer announced it would fall short of its earnings plan for the first quarter. At Federated, which runs Macy's and Bloomindale's, sales rose a disappointing 5.2 percent, with apparel sales particularly sluggish early in the month, said James M. Zimmerman, chairman and chief executive. May Department Stores Co.'s sales rose a modest 1.8 percent.

Colder temperatures also hurt apparel sales at Sears, which posted a 2.4 percent sales gain.

"In total, apparel did not meet our expectations, due to colder temperatures in many parts of the county," said Arthur C. Martinez, Sears' chairman and chief executive. Rain throughout the month also dampened sales of lawn and garden items, he said.

Target Corp. said robust sales at its Target stores, where sales rose 14.7 percent, failed to spill over into its department store divisions, leaving the corporation's sales slightly below plan for the month.

"Through the month, there was a big fear that weather would be a major depressant on sales, and it was for some retailers," said Michael P. Niemira, a vice president with Bank of Tokyo-Mitsubishi. "Some managed to do well despite that factor."

Industry leader Wal-Mart Stores Inc. performed better than expected, with sales up 8.9 percent companywide and 9.1 percent at Wal-Mart stores. At specialty retailers Paul Harris Stores Inc. and Talbots Inc., sales jumped 9.9 percent and 14.7 percent, respectively. Sales rose 6.9 percent at Kohl's Corp., a discount apparel chain.

"You're seeing the consumer shifting where they purchase," Niemira said.

Despite the modest gains, consumers have not slowed their spending, analysts said. That is reflected in the continuing strength of big-ticket consumer electronics and appliances, as well as men's apparel. One men's apparel chain, Men's Wearhouse, had an 8.9 percent increase.

At Circuit City Stores Inc., sales rose 14 percent. The increase, led by the home office category and entertainment software, reflected strength across almost all categories, said Richard L. Sharp, chairman and chief executive officer.

"The consumer still clearly is buying, and once you look beneath the surface, the fundamentals -- although maybe a bit weaker than they were late last year to early this year -- are still healthy and convincing the consumer to spend freely," Niemira said.

Another measure of retail spending, the TeleCheck Retail Index, showed a gain of 4.6 percent in April sales, with Maryland's sales also rising 4.6 percent. The index is based on checks written by consumers at more than 27,000 locations.

It showed continued strength in retail, fueled by rapid economic growth and five weekends in the month.

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