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To: Shelia Jones who wrote (2400)	9/3/1998 11:26:00 AM
From: SJS	Read Replies (1) \| Respond to of 14427

Sheila, for you: ____ RETAIL SAME-STORE SALES. Further hints that the U.S. economy might be slowing down. Before the open Thursday, a number of retail chain stores have reported their August data. This back-to-school selling season shows some weakness in the department stores and strength in some specialty retailers. On a "same store" basis, which compares the change in dollar volume sales from the prior year aggregated only for those stores open in the prior year, JC Penney (JCP) and K-Mart (KM) reported disappointing sales. KM was up only 2.9% and JCP was down 2.4%. These both reflect a weakening trend and suggest that maybe consumer spending cooled off this summer. Granted, this is limited data and should not be blown out of proportion. However, economists are forecasting a slowdown in the economy in part because of the weakness in Asia. Throw in a correction in the stock market, and maybe the ripple effects start to impact individual spending patterns. If this is true it brings both good news and bad. The good news is that a slowdown in growth will make it easier for the Fed to lower short-term interest rates. The bad news is that weaker growth also means that the slowdown in U.S. corporate profit growth will persist. There are also a couple of stores reporting very good sales this morning. Specialty retailer AnnTaylor (ANN) reported a same store sales gain of 15.5%, about twice what was expected, and The Limited (LTD) reported a 7% increase, solidly ahead of expectations. U.S. economic growth will probably indeed slow from the torrid pace of the past few years, and as it does, it will be important for investors to chose stocks of companies that are well managed. There will be less of a rising tide to lift all the boats.