Major Retailers Report Slow Sales in September : * Economy: Analysts say the numbers bode ill for the vital Christmas period.
The nation’s major retailers raised another warning flag Thursday for the upcoming Christmas season, reporting wary consumers and dismal sales in September.
Sears, Roebuck & Co., the nation’s No. 3 retailer, saw sales at its merchandise group fall 1% in September to $3.07 billion, from $3.10 billion a year ago. Same-store sales--sales at stores open more than one year and usually a better indicator of retail performance--fell 0.9%. J. C. Penney & Co. also experienced a drop of 0.4% in its same-store sales in September.
“Christmas will be a pretty miserable affair for retailers,” said Gary Shilling of A. Gary Shilling & Co., an economic consulting firm based in Springfield, N.J. Shilling said increasing layoffs “are holding down incomes and consumer confidence.”
Even for stores where sales rose, increases were lower than expected. Limited Inc., for example, said its same-store sales rose 4% in September. Some analysts said even that anemic gain would have been impossible without heavy sales promotions that hurt the company’s profit margins.
The company’s stock dropped $1.375 to close at $21.75 Thursday on the New York Stock Exchange. Limited shares were the most active stock on the Big Board Thursday, with 5.7 million shares changing hands.
Discount stores, which have recently managed to avoid the downward trend experienced by their pricier counterparts, are not doing as well as they were three months ago. Any increase in sales for discounters has been small, analysts said.
At Wal-Mart, the nation’s largest retailer, same-store sales rose only 7%, while sales from all stores were up 32% percent. At Kmart, another discount store, same-store sales rose only 1.4%.
Economists said Thursday that the sorry September results show that any recovery from the recession will be weak and far in the future. Shilling believes that the economy is going into “another double-dip recession” that will see the economy decline until late this year and recover late in 1992.
Thomas Tashjian, an economist with the New York-based First Manhattan Company, said declines in housing prices in California, where housing is “important to consumers’ sense of self-wealth,” pressured consumer confidence. He sees a decline of 3% to 4% in sales continuing through Christmas and into 1992.
Edward Eyring, an analyst with Argus Research in New York, said the small increase in sales for companies such as Wal-Mart confirms that the recovery for the retail industry will be more gradual than indicated by prior month’s figures.
“The period of depression has ended for retail industry,” he said, indicating that there has been a sharp upturn, though not a fast one.
Eyring believes that the last two months of the year, when companies gain 50% or more of their earnings, “will show an improvement compared to 1990, but it won’t be a full bounce back to profitability.”
Some California-based companies bucked the trend of lower September sales with increases in same-store sales.
Anaheim-based Clothestime Inc. showed an increase of 22%, one of the largest in the country.
Pic ‘N’ Save, a general merchandise chain based in Dominguez, showed an 19.3% increase for September.
Eileen Hupp, Pic ‘N’ Save marketing vice president, believes that the driving forces behind the company’s strong September sales were back-to-school merchandise and initial selling on Halloween items. Hupp said she expects October sales also to be favorable, and Christmas sales to be good.
In order to encourage more holiday spending, experts predict a “promotional Christmas,” one in which retail stores will use advertising, markdowns and sales to entice consumers.
“We’re being very aggressive about Christmas,” Hupp said.
Pic ‘N’ Save will offer “strong bargains” to capitalize on increasing demands for bargains, she said.
“It’s no longer chic to pay retail. People are proud to get a bargain, and everyone wants one,” she said.
California Retailers
Although September retail sales figures were dismal, three California retailers bucked the trend:
* Clothestime Inc., Anaheim, said same-store sales rose 22% over last September. Clothestime stock added 37.5 cents Thursday to close at $8.875.
* Pic ‘N’ Save Corp., Dominguez, said same-store sales increased 19.3%. Pic ‘N’ Save stock was up 12.5 cents Thursday to close at $19.25.
* Gap Inc., San Francisco, said same-store sales rose 20%, compared to an 8% increase in the same period last year. Gap stock was up $1.50 on Wednesday in advance of its sales report; it slipped 62.5 cents Thursday to close at $43.25.
More to Read
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.