ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, August 9, 1996 TAG: 9608090043
SECTION: BUSINESS PAGE: A-11 EDITION: METRO
DATELINE: CHICAGO
SOURCE: Bloomberg Business News
THE OLYMPICS and cool weather hurt sales, analysts said, but consumer debt may pose a longer-term threat.
U.S. retailers took home a tin medal in July, and blamed their poor performance on the Olympics.
Too many people sat at home watching the Atlanta Games on television instead of going shopping, retail companies and analysts said. In addition, unusually cool weather discouraged purchases of shorts, T-shirts, air conditioners and fans, and stores didn't have as many clearance sales.
Plenty of Americans gathered around TVs to watch the Olympics - an estimated 209 million. But the Games were only a short-lived headache for retailers. A bigger concern is that consumers are spending cautiously because of economic worries and soaring debt.
``We knew July would be difficult with the Olympics, but I still don't see any real strength in consumer buying habits,'' said Peter Schaeffer, an analyst with Dillon Read.
The hardest-hit in July were department store chains.
Even so, the weak sales last month aren't necessarily dire for retailers. Strong July sales often are the product of deep discounts, giving retailers smaller profits on what they sell. This July, retailers weren't forced to mark down goods drastically, because inventories were leaner and sales in previous months were strong.
Because of the strong showing in May and June, analysts still expect retailers to post increases in second-quarter earnings, albeit small ones. While sales could pick up in the next two months with the introduction of fall clothes, many said the second half probably won't be stellar.
``I'm still not convinced we are going to have a gangbuster holiday,'' said Elizabeth Ladd, an analyst at Stephens Inc. ``Consumers are definitely up there in terms of credit card debt.''
Economic data reflect that sentiment. The Federal Reserve, in its regional economic outlook, said retail sales slumped recently in most parts of the country.
Robust sales increases were reported by two of the three biggest discount chains - Wal-Mart Stores Inc. and Target, a unit of Dayton Hudson - reflecting a shift in spending to stores with lower prices.
Some retailers had tough comparisons with year-ago results, following strong sales in July 1995 spurred by deep price cuts and a heat wave that helped sales of air conditioners and fans.
Analysts said some other chains' sales may have been stronger than expected because they had clearance sales after weak sales in previous months.
``Three things had a big effect on sales: what retailers were up against last year, how much clearance they did, and how much they are hurt by weather,'' said Peter Schaeffer, an analyst at Dillon Read. ``These things made for a lot of inconsistencies.''
Here are July results reported by major chains operating stores in Western Virginia. The monthly sales are followed by the percentage of change from July 1995 results, and by the change in same-store sales. The latter is a measure of stores that have operated for at least 12 months. Same-store sales are considered a better indicator of a retailer's performance because they remove the impact of extraordinarily strong sales from opening new outlets.
Best Products Co. Inc.: sales of $58.3 million, down 26.9 percent from July 1995, same-store sales down 28.6 percent.
Bombay Co.: $23.1 million, up 11 percent, up 8 percent.
Charming Shoppes, parent of Fashion Bug and Fashion Bug Plus stores: $69.7 million, down 4.9 percent, up 6 percent.
Circuit City: $581.3 million, up 5 percent, down 11 percent.
Family Dollar Stores: $145.3 million, up 20.7 percent, up 13.6 percent.
Heilig-Meyers: $89.4 million, up 5.9 percent, down 4.4 percent.
J.C. Penney Co.: $1.48 billion, up 12.5 percent, not reported.
Kmart Corp.: $2.32 billion, down 7.8 percent, down 3.8 percent.
Lechters: $29.5 million, down 0.2 percent, down 4.9 percent.
The Limited Inc.: $522.5 million, up 9 percent, up 3 percent.
Lowe's Cos.: $671.1 million, up 18 percent, up 4 percent.
May Department Stores Co., parent of Hecht's: $676.9 million, up 6.7 percent, down 0.4 percent.
S&K Famous Brands: $7.4 million, down 1.3 percent, down 5 percent.
Sears, Roebuck and Co.: $1.98 billion, up 2.9 percent, down 0.5 percent.
TJX Cos., parent of T.J. Maxx: $459 million, up 87 percent, up 4 percent. Wal-Mart: $7.52 billion, up 11 percent, up 3 percent.
Woolworth Corp.: $596 million, down 0.7 percent, up 1.1 percent.
- Staff writer Megan Schnabel contributed to this story.
LENGTH: Medium: 86 lines ILLUSTRATION: GRAPHIC: Chart by AP: Sales of top general retailers.by CNB