December 4, 1998
Retail Sales in November
Showed Moderate Increase
By REBECCA QUICK
Staff Reporter of THE WALL STREET JOURNAL
Seasonal promotions offset unseasonably warm weather to produce
moderately higher retail sales in November, suggesting sharp markdowns are
likely to continue through year end at many stores.
Continuing last year's practice of early and frequent price discounts around
the Thanksgiving weekend, retailers tried to lure more consumers into malls
at the opening of the holiday season. But shoppers seemed to be in a browsing
mood, postponing many purchases until crunch time closer to Christmas,
analysts say. That's when stores are more likely to offer deeper discounts to
move merchandise.
"Many retailers have been training their customers to buy on sale," said John
Staton, the partner in charge of Andersen Consulting's retail-strategy practice
in Chicago. "It almost becomes like a drug, and those retailers that don't offer
other areas of value for their customers become more and more dependent [on
promotions]."
Same-store sales, or those at stores open at least
a year, rose 3.5% in November, according to
the Goldman Sachs index of 60 retailers. That
matched the year-earlier figure, but was lower
than the year-to-date gain of 5% posted by the
index, which is weighted by the relative size of the retailers.
Wal-Mart, Costco Show Strong Gains
Strong gains were chalked up by discounters such as Wal-Mart Stores Inc. and
Costco Co. and specialty apparel retailers such as Gap Inc. But midline
department stores such as Federated Department Stores Inc. reported declines,
continuing trends that began earlier this year.
Unusually warm weather, particularly in the Northeast and Mid-Atlantic
regions, plagued many apparel retailers. For the first six days of the holiday
shopping period, starting with the Friday after Thanksgiving, temperatures
ran eight degrees above the national average.
The lack of chilly weather stung retailers who had stocked up on winter coats,
gloves and sweaters. Dillard's Inc., for example, saw a 4% decrease in
same-store sales. And Kmart Corp., which is much more apparel-heavy than
other discounters, reported only a 2.5% gain in same-store sales, trailing
competitors in that category.
"It's 62 degrees in New York -- nobody's going to buy a winter coat," said
Jeff Feiner, retail analyst at Lehman Brothers.
What happens for the rest of the holiday season depends largely on what the
weather does over the next few weeks, analysts said. "Retailers were
promotional over Thanksgiving, but if the weather doesn't turn colder in the
next few weeks you're going to see even deeper markdowns," said Richard
Baum, a retail analyst at Goldman Sachs in New York.
Neiman Marcus Tops Group
Among the department stores, top-performers were Neiman Marcus Group,
which posted a 9.9% same-store sales gain, and J.C. Penney Co., with a 4.9%
increase. Analysts said both companies offered many promotions during
November.
Sears, Roebuck & Co. had a 3.6% same-store decrease, which it reported
Wednesday, a day before the rest of the industry. The retailer blamed its
troubles on the weather, and warned stock-market analysts that holiday sales
might not be as strong as retailers had predicted.
Dayton Hudson Corp., the Minneapolis-based retailer, reported a 3% rise in
same-store sales. But if sales of its Target and Mervyn stores were excluded,
its department stores had a 2.9% decrease in same-store sales. The retailer
noted that the temperature in Minnesota on Tuesday was the warmest ever
recorded for any December day in history. It added that abnormally warm
weather last month hurt apparel sales at all of its stores.
Gap posted a sharp 16% increase in same-store sales, led by its Banana
Republic and Old Navy units. Other specialty retailers also posted gains.
AnnTaylor reported an 11% increase, Limited Inc. had an 8% gain and
Intimate Brands Inc. weighed in with a 10% rise.
Specialty retailer Talbots Inc. reported a 14% gain in sales at stores open at
least a year, aided by strong promotions that it offered shoppers in the early
part of November. In the first week of the month, it offered 20%-off coupons
to 100,000 customers; the second week it offered coupons to its 400,000
charge customers through its catalog.
Among electronics retailers, Best Buy Co., Minneapolis, said sales increased
12.2% at stores open for at least a year. Best Buy said it experienced
double-digit sales increases in consumer electronics and entertainment
software for the period ended Nov. 28, while personal-computer sales rose on
a same-store basis, despite a decline in average selling prices per unit.
Tandy Corp., Fort Worth, Texas, said November sales at RadioShack stores
open for at least a year were flat with the year-earlier period. The
consumer-electronics retailer said sales of remote-control cars, cellular
phones and PCS phones increased during the month, but sales of both
computers and audio-visual products were well below expectations.
--Robert Tomsho and J.C. Conklin contributed to this article |
