Discounters Post Strong July '01 Sales
Amid a weakening economy and mounting layoffs, U.S. consumers again found shopping refuge at discounters in July as they sought bargains on apparel, electronics and back-to-school items. While retailing giants Federated Dept. Stores, Wal-Mart Inc. and others forecast a profit slowdown in their second-quarter earnings announcements, analysts were buoyed by the better-than-expected Commerce Department report that said overall retail sales were flat for July—the second straight month such a performance was turned in. The report said retail sales—apart from those of cars and trucks—rose slightly, climbing 0.2 percent for the month. Clearance-driven sales helped Wal-Mart report a 6 percent increase in sales at stores open at least a year, but the nation’s largest retailer said shoppers’ preference for lower-price items, as well as “competitive conditions,” are squeezing margins. The Bentonville, Ark.-based company said consumers are spending about 25 percent of the rebate checks cashed in its stores. Plano, Texas-based J.C. Penney said planned markdowns and promotions helped the company post a 2.2 percent rise in same-store sales. However, the company later reported a heavy second-quarter loss. Federated Dept. Stores Inc., owner of Macy’s, Bloomingdale’s and other department stores, reported a 4.2 percent decline in same-store sales, partly reflecting the restructuring of its Fingerhut catalog. Sears Roebuck & Co. saw same-store sales fall 3 percent. Gap Inc., the No. 1 specialty-apparel chain, continued to sing the retail blues, posting a 12 percent same-store sales drop, worse than the 4 to 9 percent decline analysts had expected. The San Francisco company said it planned to cut 790 more jobs to bolster profits and improve operations. Meanwhile, specialty retailers took the heaviest hits, with youth-oriented apparel retailer Abercrombie & Fitch posting a 14 percent decline and Ann Taylor Stores down 17.4 percent. Pacific Sunwear fell 5.3 percent, citing a “very difficult” men’s business and flat junior girls’ business that saw an uptick for the last two weeks of the month. Some retail stalwarts bucked the trend, including Dillard’s Inc. The Little Rock, Ark.-based retailer reported a 7 percent gain in same-store sales, beating expectations. Analysts said that Dillard’s did a good job in inventory management and was able to present merchandise in ways that also attracted frugal customers. —Nola Sarkisian-Miller
