Slipping Economy Slows Retail Sales

Associated Press

Consumers kept their eye on the slowing economy during April, shopping hesitantly and leaving the nation's big retailers with disappointing results for the Easter holiday.

Sales figures released by the big store owners Thursday fell below expectations. The numbers, along with lackluster auto sales figures announced earlier this week, supported the theory that the economy is slowing.

"What we're seeing now is weakness in many consumer markets," said Sandra Shaber, an economist with the forecasting service Wefa Group in Bala Cynwyd, Pa.

However, she said, "consumer spending is weaker than it ought to be," because income and job growth is stable. Shaber suggested consumers are taking it easy at the stores and on car lots out of concern that the slowdown in economic growth could portend hard times ahead. They may also think prices are too high, she said.

Retailers attributed their disappointing performance to the economy and to unseasonably cool weather in the Northeast.

The April results were particularly troubling because they followed a weak March, and because the Easter holiday failed to perk up business. The industry generally considers results for both months together in assessing sales strength.

The Salomon Brothers Inc. retail index, the investment firm's barometer of sales performance, rose 7 percent after a 0.3 percent drop in March.

Salomon Brothers analyst Jeffrey Feiner noted that the combined index for March and April rose a weak 3 percent, compared to a 7.4 percent gain a year earlier.

Dayton Hudson Corp.'s results prompted the retailer to warn its first quarter earnings would fall to about 10 cents a share from 47 cents in the first quarter of 1994.

Investors were displeased. They sold Dayton Hudson stock down $1.75 a share to $64.50 on the New York Stock Exchange. The stocks of most other big storeowners were little changed.

Feiner said other retailers' profits would be hurt by the poor showing. However, the first quarter is the least important in the retail calendar, so retailers could still have a good year if business accelerates the rest of the year.

At Federated Department Stores Inc., April sales were weaker than expected the first half of the month, before Easter, but business picked up in the latter weeks. Chairman Allen Questrom called April sales disappointing, but said, "there is some cause to hope that the retail sales trend may be improving."

Wal-Mart Stores Inc., the nation's largest retailer, said sales from stores open at least a year rose 10.7 percent from last April, while total sales were up 19 percent.

Sales from stores open at least a year, known as same-store sales, are considered the most accurate measure of a retailer's strength. They exclude the results of newer stores, where sales tend to be unusually high. Same-store sales also exclude results from stores closed over the past year.

Sears, Roebuck and Co. said same-store sales advanced 1.4 percent and overall sales rose 2.2 percent.

Kmart Corp. said same-store sales rose 7.6 percent, while overall business was up 9.7 percent.

Dayton Hudson said same-store sales rose 6.1 percent while overall business grew 11.8 percent. The company operates Target discount stores

J.C. Penney Co. said same-store sales at its flagship stores rose 2.6 percent, while total sales, including its drugstore and catalog operations, rose 4.1 percent.

May Department Stores Co. reported a 5.9 percent same-store sales gain and a 12 percent overall increase.

Federated said same-store sales rose 4.1 percent, while overall business was up 78.4 percent. The overall sales increase reflects Federated's recent acquisition of R.H. Macy Co.

Limited Inc. reported same-store sales were up 2 percent while overall business rose 10 percent. Gap Inc. said same-store sales rose 3 percent, while total sales rose 20 percent.

These results are narrower than the monthly retail sales report from the government, which includes sales from supermarkets, restaurants and car dealers. Those figures will be released May 11.

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