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War coverage knocks retail sales
Industry group sees 14% drop on first day alone as the shoppers succumb to war watching.
March 25, 2003: 9:54 AM EST

NEW YORK (CNN/Money) - U.S. chain store sales were burdened by the war last week -- including a 9.9 percent dip in the first four days of the war with Iraq -- as shoppers opted to stay home to watch war coverage on television.

The largest single day decline came on the first full day of the war, March 20, as sales slid 13.9 percent versus the same day last year, industry group ShopperTrak reported.

"It seems clear that the mild pullback in consumer spending over the last week was due in part to the war beginning in the middle of a week, as well as the fact that the effects of the war have been built into the retail trend for the past month or so," said Michael Niemira, lead consultant for ShopperTrak.

Year-over-year sales for the week slid by 9.8 percent, but analysts attributed much of this decline to Easter falling on April 20 compared to March 31 last year. Sales for the week ended March 22 fell by only 2 percent compared to the previous week, the survey found.

Retail sales in the Northeast saw the largest decline with a 10.8 percent drop on the first four days of the war compared to the same period last year, followed by the South with a 10 percent drop, the West with a 9.6 percent decline and the Midwest with a 9.3 percent slide.

Wal-Mart (WMT: Research, Estimates), Federated (FD: Research, Estimates) and J.C. Penney (JCP: Research, Estimates) said Monday that their sales were impacted by shoppers staying home to watch war coverage.

Separately, the Instinet Research weekly Redbook report said weekly chain store sales fell 1.1 percent in the week ended March 22 compared with the same week a year ago.

Sales declined 1.3 percent in the three weeks ended March 22, compared with the previous month, the report said. This year Easter falls later than last year, postponing peak demand for spring clothing until April.

"The week's modest improvement was mainly due to springtime weather and sales promotions, but the rise was too small to lift the month's average," the report said. "The 'CNN Effect' kept consumers at home watching TV."

The Redbook Average is compiled from a sample of general merchandise retailers representing about 9,000 stores. Same-store sales measure revenue at stores open at least a year.

But providing some contrast, the Bank of Tokyo-Mitsubishi and UBS Warburg said in a joint report that weekly chain store sales edged higher last week as mild weather was partly offset by the consumer pullback caused by war.

U.S. chain store sales increased by 0.1 percent in the week ended March 22, after rising 0.4 percent in the preceding week, the joint report said.

"Temperatures were modestly warmer than the same week of the prior year, which helped to lift seasonal demand," the report said. "However, that weather lift was offset to a degree by a mild 'CNN effect' as the war to disarm Iraq began."

Sales compared to last year were up 1.3 percent, compared with a 0.6 percent year-on-year increase reported in the previous week.  Top of page




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