Retail Sales Wilted in July’s Heat Wave

The nation’s largest general retailers were again at the mercy of weather extremes during July, as a relentless heat wave kept shoppers home and prevented stores from clearing out their summer merchandise.

Wall Street analysts reviewing sales results announced by the retailers Thursday said the higher temperatures contributed to a drop in store traffic.

“The customer says, ‘It’s too hot to go do anything right now,’ ” said Walter Loeb, an analyst with the investment firm Morgan Stanley & Co.

Loeb noted that July is generally not an important month for retailers, although they do try to use the time to run clearance sales.

With fewer customers last month, stores had problems moving their summer merchandise, said analyst Jeffrey Feiner of Merrill Lynch & Co.

Consumer Cutbacks

The July results ended a modest recovery the stores enjoyed in June--which followed a slump in April and May caused by cold and rain.

Weather was not the only factor in last month’s lackluster showing. Feiner said the stores’ reports also reflected the overall softness that has plagued the retail industry for about a year and a half.

Consumers have cut back on their retail outlays because of high installment debt levels and uncertainty about the economy. As a result, retailers’ sales have been a soft spot in an otherwise strong economy.

Consumer spending, which also includes expenditures for food, medical care, autos, utilities, transportation and other necessities, is closely watched because it accounts for two-thirds of the gross national product.

Apparel lines were the hardest hit last month, said Jeffrey Edelman, an analyst with Drexel Burnham Lambert Inc., while “hard lines,” such as home appliances, fared better.

During the past year apparel sales have plunged as women turned away from shorter skirts and from clothes they perceived as boring. Retailers have revamped fall lines, and analysts predict there will be a pickup in clothing sales that may begin to show up in the stores’ August results.

Sears Reports Gains

In their reports Thursday, several retailers recorded sales increases under 3%--meaning the stores were losing ground to inflation, which has run at an annual rate of 4.4% so far this year.

The nation’s largest retailer, Sears, Roebuck & Co., said its overall sales rose 7.2% last month and 5.4% for the first half of the fiscal year, compared to the 1987 periods. Sears’ sales for stores open at least a year, called same-store sales by the industry, were up 2.5% last month and 2.1% for the year so far.

Retailers and industry analysts believe same-store sales are a more accurate yardstick of a company’s performance than figures that include sales from new stores.

K mart Corp. said its overall sales rose 4.8% last month and 5.3% during the first half, while same-store sales edged up 0.7% in July and 1.8% for the year to date.

Wal-Mart Stores Inc. said its overall sales rose 30% in July and 31% for the first half. Same-store sales rose 14% last month and 12% so far this year.

J. C. Penney Co. said its overall sales rose 2.7% in July and 2.6% for the first six months. Same-store sales were up 2.1% last month and 1.6% in the first half.

Carter Hawley Hale Stores Inc. said overall sales for its five department store divisions were up 1.6% in July and down 1% in the first half. The figures were the same for the month and for the year to date, on a comparative stores basis.

Dayton Hudson Corp. said its overall sales were up 13.1% last month, and 17.6% for the year to date. The company’s same-store sales slipped 0.9% during July, while rising 1.5% over the first half.

May Department Stores Co. said its overall sales rose 23.5% in July, and 12% during the first half. Same-stores sales increased 4% for the month, and 1.2% so far this year.

Split Forecasts

F. W. Woolworth Co. reported an 11.1% sales gain for July, and an 11.9% increase for the first six months.

Montgomery Ward & Co. said its sales rose 1% last month, and 2.8% over the first half.

The results reported Thursday were from general merchandise and apparel retailers. Unlike monthly retail sales figures released by the federal government, they do not include sales at auto dealers, supermarkets or restaurants.

July marks the end of the retailers’ second quarter. Feiner predicted that the companies’ would be down from the same period of 1987, while Edelman forecast a rebound during the third quarter.

MAJOR RETAILERS’ SALES IN JULY

In millions % of dollars 1988 change Sears 2,390 +7.2 K mart 1,947 +4.8 J.C. Penney 831.0 +2.7 May Dept. Stores 734.8 +23.5 Dayton Hudson 774.4 +13.1 Wal-Mart Stores 1,593 +30.0 Woolworth* 309.0 +11.1 Montgomery Ward 329.2 +1.0 Carter Hawley Hale 172.2 +1.6

* Excludes foreign sales.