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To: Jim Willie CB who wrote (5324)	8/28/2002 6:42:33 PM
From: pogbull	Read Replies (1) \| Respond to of 89467

Retail sales fall sharply during last two months 08/28/02 cleveland.com Anne D'Innocenzio Associated Press New York - The critical back-to-school selling season isn't making the grade that merchants were hoping for, and Wall Street analysts are increasingly worried about consumer spending for the rest of the year. Try Our Classifieds Retailers including Federated Department Stores Inc., May Department Stores Inc., Sears, Roebuck & Co. and Target Corp. are seeing August sales below forecasts. Wal-Mart Stores Inc., the world's largest retailer, said yesterday that overall company sales are tracking at the low end of projections. "Sales have deteriorated sharply since early July, almost as if someone turned off a switch," Daniel Barry, an analyst at Merrill Lynch & Co., said during a conference call with investors. "It appears that the consumer is rolling over," he added. Overall, school supplies appear to be faring better than apparel. And J.C. Penney Co.'s department store business has bucked the trend so far, reporting revenues that are above the company's goals. But Merrill Lynch downgraded 16 retailing stocks yesterday - eight department stores and discounters and eight specialty stores. The nation's largest brokerage house also noted that a sluggish stock market and declining wages could hurt retailers of consumer electronics and home improvement merchandise, though it didn't downgrade any of that category's stocks. "We have clearly gone through a sluggish period for the last two months," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. Niemira said, "There are lot more negatives out there than positives. The climate is making it exceedingly difficult to read where the consumer is." Barry is cautious, noting that in addition to economic uncertainty, sales momentum could be derailed by continued warmer-than-usual fall weather, a subdued mood that could surround the anniversary of the Sept. 11 attacks, and six fewer holiday shopping days. Furthermore, Barry emphasized that retailers have failed to take into account that they are up against a spending bubble that began post-Sept. 11 and hit its high in April. After an initial sharp drop-off in merchandising spending following the attacks, spending at retail stores - particularly in home improvement - accelerated, though consumers spent less on travel and eating. Barry said he expects the ratio of general merchandise sales to total consumer spending to continue declining and even accelerate after Sept. 11. With stores operating on lean inventories, Jeff Edelman, an apparel analyst at UBS Warburg, doesn't think merchants are panicking. He also is heartened by some improvement in back-to-school sales during the past week or so. "The last week of August and the first couple of weeks in September are the most important," he said. Niemira disagrees. Even if September turns out to be a stellar month, he said, those sales won't be enough to save the back-to-school business, which is second in importance only to the holiday season. "If you don't get it in August, two-thirds of sales are lost for the back-to-school season," he said. © 2002 The Plain Dealer.