CONSUMERS opt for discount retailers in August as department stores report dismal sales
Thursday, September 6th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ Consumers _ concerned about job security and declining stock market portfolios _ continued to flock to discount chains in August, leaving most department stores and apparel chains with disappointing back-to-school sales.
As the nation's largest retailers reported sales figures Thursday, it was evident that those like Wal-Mart Stores Inc. were the biggest beneficiaries of back-to-school spending, which has now stretched out from July through late September.
In a separate report, the Labor Department said that new claims for state unemployment insurance dropped last week but remained at a level suggesting the labor market has not rebounded from the economic downturn that began last year.
Retailers have been hoping that $40 billion in tax rebate checks would spur stronger growth in coming months, though analysts are unsure about what kind of impact they have had.
Wal-Mart reported a robust sales increase of 7 percent, well beyond the 5.8 percent estimate from Thomson Financial/First Call.
Some analysts surmised that the world's largest retailer is stealing market share away from rivals like Target Stores, which reported a 2.4 percent gain.
However, many department stores, particularly Federated Department Stores, as well as specialty stores like Gap Inc., reported dismal results. Gap, struggling with all of its divisions, reported a 17 percent decline in sales. Federated reported a 2 percent sales decline in stores open at least a year.
Retailers catering to teens also had mixed results, indicating that a tough economic environment was making consumers more choosy. Abercrombie & Fitch reported a 10 percent decline, much worse than what analysts expected. Meanwhile, American Eagle beat expectations with a 2 percent sales gain.
``Consumers are becoming selective in terms of what they will buy, and at what price,'' Bank of Tokyo-Mitsubishi Ltd. vice president Michael P. Niemira said.
August results were somewhat weaker than expected, Niemira said. A preliminary tally of stores he tracks generated a 3.7 percent increase, below the 4.1 percent gain he predicted.
``This was a mixed bag again,'' said Jeffrey Feiner, managing director of Lehman Brothers. ``Consumers were much more interested in buying on sale or buying at value-oriented chains.''
Discount retailers Costco Wholesale Corp. and Kohl's Corp. reported solid sales gains in August.
Costco posted a 4 percent sales increase in stores open at least a year, below the 5 percent increase analysts expected. Kohl's reported a 4.9 percent gain in stores open at least a year, below the 5.4 percent gain predicted by Thomson Financial/First Call.
Sears, Roebuck & Co. eked out smaller gains. The retailer said its U.S sales in stores open at least a year edged 0.2 percent higher, beating forecasts of a 1.6 percent decline.
Some other figures on August sales:
_J.C. Penney Co.: Same-store sales up 7.5 percent; total sales up 4.4 percent.
_Limited Inc.: Same-store sales down 4 percent; total sales down 5 percent.
_May Department Stores: Same-store sales up 0.3 percent; total sales up 3.3 percent.
_Talbots Inc.: Same-store sales down 0.9 percent; total sales up 3 percent.