THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, September 2, 1994 TAG: 9409020648
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
LENGTH: Medium: 71 lines
Cool, sunny weather and fear of rising interest rates fueled August sales at the nation's home-improvement stores, but the strength of back-to-school sales is still questionable, analysts said Thursday.
``It's a very mixed bag,'' said Kenneth Gassman Jr., a retail analyst with the Richmond brokerage Davenport & Co.
The back-to-school report on sales is still out, he said. People might be shopping later because holidays have delayed the beginning of classes in many school systems. Or they simply aren't in a buying mood.
``We still need to see September back-to-school results,'' Gassman said.
The back-to-school season is important for retailers because it is one of the biggest periods for apparel sales. Historically, it has been a bellwether to the crucial Christmas shopping season.
So far, the August showing hasn't given Gassman a clear sign of how much customers are willing to spend for the Christmas season.
Some retailers, including Wal-Mart Stores Inc., reported sales figures that were slightly off. Specialty apparel chains like Limited Inc. continued to report sluggish sales, but department store operators had an OK month.
``Several of the major department stores had good results but some of the smaller specialty sales continue to struggle,'' said William Mel Hughes, analyst at Stein, Roe & Farnham in Chicago.
He attributed strong performances by JC Penney, Federated and May Department Stores to back-to-school sales.
JC Penney's same-store sales were up 10.9 percent, with Federated sales up 5.9 percent and May, which operates Hechts, up 5.2 percent.
``August is a schizophrenic month overall,'' Hughes said. ``In the first part of the month there are still some summer clearances, with back-to-school compressed in the final two weeks of the month.
``So we probably won't get a clear picture until the month of September.''
Major department store chains around the country reported moderate same-store sales. But the same sales at specialty apparel shops continued to drag.
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 Merchandise, with a 5.2 percent increase, was ``very impressive in view of the fact they had strong sales this month last year,'' Hughes said.
``Wal-Mart also was strong, especially in the discount store division where they continue to outpace their competitors,'' he said, adding that Sam's Club division sales continued weak and a drag on overall Wal-Mart sales growth. The Sam's Club same-store sales were down 2 percent.
Gassman, the analyst from Davenport & Co., said sales of women's apparel have been sagging for a long time.
``There's nothing out there compelling,'' he said. ``The last time we had a good apparel season was back in the fall of 1992. Manufacturers have been scared to bring out anything radically different. They are afraid to get stuck with outdated inventory.''
But Gassman said many shoppers - professionals and do-it-yourselfers - headed for home-improvement centers last month.
``The weather wasn't as hot as it was last year,'' he said. ``And customers were moving ahead with their projects because they were worried about rising interest rates.'' MEMO: Staff Writer Stephanie Stoughton contributed to this report. ILLUSTRATION: Graphic
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