Retail Reports Mixed in June '01
June was a mixed bag for retailers as Bentonville, Ark.-based Wal-Mart Stores Inc. and other discounters fared better than department stores and apparel chains, which continued to languish as a result of heavy markdowns and limited fashion trends. Consumers, spooked by the economy, snapped up basics like toothpaste and household cleaners while avoiding summer clothing purchases. According to figures released by the Census Bureau of the Department of Commerce, retail sales for June posted a disappointing 0.2 percent gain from the previous month. “As expected, the first half of 2001 has been very frustrating for many retailers,” said National Retail Federation Chief Economist Rosalind Wells. “The soft economy has left consumers more cost-conscious, purchasing out of necessity rather than desire or impulse.” Relief may soon be on the way as aggressive rate cuts by the Federal Reserve and tax rebates possibly reenergize consumer spending. Wal-Mart, the world’s largest retailer, even announced last week that it would cash those rebate checks—$300 for single taxpayers and $600 for couples—free of charge. The discounter rang up a better-than-expected 6.9 percent increase in same-store sales. Federated, which issued a profit warning earlier in the week, reported that sales from stores open at least a year fell 6.4 percent. Same-store sales also plummeted 7.7 percent at rival May Department Stores, parent of Hecht’s and Lord & Taylor. Ann Taylor cut its second-quarter earnings forecast as it reported a 12.3 percent drop in June same-store sales. Coming off a weak May, J.C. Penney enjoyed a turnaround from a flush Father’s Day and strong women’s apparel sales, posting a 3.8 percent increase in comp-store sales. Also taking a beating in same-store sales were luxury retailers, including Saks Inc., with a 5.2 percent decline, and Neiman Marcus, with a 5.4 percent drop. Repeating a bruising May performance, Pacific Sunwear posted another same-store sales decline, tumbling 7.7 percent. —Nola Sarkisian-Miller
