Sales Up for Dept. Stores, Discounters : Retailing: Stock market jumps 38.75 points on news, but executives, analysts remain cautious.
Heavy promotions and discount pricing helped boost sales at many department stores and discount chains to higher than expected levels in June, according to figures released Thursday.
The news helped send the stock market 38.75 points higher, but retail executives and analysts said they remain cautious about predicting continued increases for the latter part of the year.
Target Stores, owned by Minneapolis-based Dayton Hudson Corp., reported a 6% sales gain, but Dayton Hudson spokeswoman Ann Barkelew said, “While we’re encouraged by Target sales particularly, we don’t want to say there’s anything like the beginning of a trend.”
Target’s sales growth was due in part to recent hot weather that made shoppers buy summer merchandise they had put off purchasing because of cooler weather earlier in the season.
Sears Merchandise Group reported a strong 12% increase in same-store sales. The retailer said it saw growth in sales from a variety of merchandise, including clothing, footwear, major appliances and automobile tires. In composite trading on the New York Stock Exchange, Sears stock rose $1.875 to close at $58.
Apparel sales also helped J.C. Penney Co. realize a 4.5% increase in same-store sales for the month. But some of the gain came from unexpected, brisk sales from its catalogue. “We’re benefiting a little earlier than we thought with the Sears (catalogue) going out of business,” said Duncan Muir, a spokesman for the Dallas-based chain.
Penney stock also gained $1.875 to close at $45.125 in Big Board trading.
Both analysts and company executives attributed the stronger sales to promotions or “value-pricing.”
“They hung out the half-price sale signs . . . and the customer obviously responded,” said Alan Millstein, publisher of the retail newsletter Fashion Network Report. But such discounting will not help corporate profits, Millstein said.
Discounters such as Troy, Mich.-based Kmart Corp. said their commitment to discounting helped maintain sales. “Consumers are responding very favorably to our pricing strategy on our everyday-type products,” said Orren Knauer, director of investor relations at Kmart.
Knauer said Kmart’s merchandising group gained 4.7%, but the company reported overall sales up only 2.8% because its Pace warehouse and Payless Drug Stores chains had losses for the month.
Other discounters reported even stronger gains. Wal-Mart Stores Inc., the nation’s largest retailer, said same-store sales rose 7% in June over June, 1992.
Several companies, such as Los Angeles-based Carter Hawley Hale Inc., also cited stronger Father’s Day promotions. “We have a very good value-price program in our men’s department,” said Bill Dombrowski, spokesman for the company, who said its sales increased 3.3% for the month.
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