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Retail sales suffer
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September 17, 2001: 2:48 p.m. ET
Chains report lower sales after terrorist attacks; consumers hard to gauge
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NEW YORK (CNNfn) - Several of the nation's biggest retailers Monday reported a sharp drop in sales last week as consumers focused on terrorist attacks that destroyed New York's World Trade Center and a section of the Pentagon near Washington, D.C.
Economists and investors are keeping careful watch over consumer behavior in the wake of the Sept. 11 tragedy, as their spending, which accounts for two-thirds of the economy, has helped keep the country out of a recession.
Several analysts have expressed concern that a protracted spending slowdown following Tuesday's tragedy could shove the economy into a recession.
Retail shares, which many investors were looking to for signs of life in the upcoming holiday season, were mostly lower Monday along with the rest of the Dow Jones industrial average, the Nasdaq and the S&P 500.
Most retailers won't report monthly sales for September until Oct. 11. Several chains, including Wal-Mart, Federated, Sears and Barnes & Noble, closed many of their stores Tuesday following the attack.
Wal-Mart Stores Inc. (WMT: down $1.41 to $44.82, Research, Estimates), the world's biggest retailer, said sales at stores open at least a year, a key retailing gauge known as comparable-store sales, plummeted 10 percent Tuesday after the attack, but slowly returned to previous levels by the weekend. Sales of specific items such as flags, ribbon, televisions, gas cans, batteries and certain fabrics spiked, the Bentonville, Ark.-based chain said.
Meanwhile, Federated Department Stores Inc. (FD: down $2.72 to $29.05, Research, Estimates), parent of Macy's, Bloomingdale's and several other chains, said sales dropped $65 million below plan for the week, half of that occurring Tuesday.
Sales improved later in the week and during the weekend, but remained well below plan, the Cincinnati-based company said. "The trend of the business for the remainder of the third quarter and for the fourth quarter will become more clear over the next few weeks."
Sears Roebuck & Co. (S: down $3.96 to $34.82, Research, Estimates) saw sales tumble 50 percent last Tuesday as many malls, where its stores are located, closed after the attack. The Hoffman Estates, Ill.-based chain pulled all its broadcast advertising for the remainder of the week but plans to reinstate it this week, the company said in a recorded sales announcement.
Sales trends improved overall as the week progressed, but remained in the negative low double-digits. Sears said sales are running below its plan for a low single-digit decrease for September.
Additionally, Barnes & Noble Inc. (BKS: down $2.49 to $33.95, Research, Estimates), the world's biggest book retailer, said comparable sales at its "super" stores last week fell from a 4.7 percent increase Sunday to a 55.1 percent drop Tuesday. Contributing to that drop was the fact that many of its stores were closed Tuesday. Sales slowly improved later in the week top show a 4.5 percent increase by Sunday.
The company said it has seen increases in sales of books with religious or spiritual content in the last week.
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Analysts are anticipating a 6 percent increase in third-quarter retail profit compared with a 6.5 percent decline a year earlier, according to earnings tracker First Call. Fourth quarter expectations are for a 22.2 percent increase compared with a 11.7 percent drop a year earlier.
But that was before Tuesday's tragedy. Now it's uncertain what sales will do for the rest of the year. Now, with several retailers seeing sales bounce back to levels before the attack, analysts cannot project spending levels with any degree of certainty.
"I think its too soon to say. I think we need a little bit more time to see where things settle. There are no precedents," UBS Warburg retail analyst Linda Kristiansen said, adding that it likely will take at least 4-6 weeks before consumer behavior can be gauged. Kristiansen said spending is likely to be discretionary, with basics such as food and personal care items continuing to sell, but things like expensive jewelry and home furnishings selling poorly. 
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