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Discount retail sales surge
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October 8, 1998: 10:52 a.m. ET
Economic uncertainty is changing retail spending; discounters reap rewards
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NEW YORK (CNNfn) - The nation's leading discount stores last month posted solid gains in same-store sales while traditional department stores and regularly priced specialty retailers saw few lines at the cash register, a sign that economic uncertainty may be chipping away at consumer confidence.
The nation's fourth-largest retailer, J.C. Penney Co. Inc. (JCP), blamed the weather and changing consumer spending patterns for its 1.2 percent drop in same-store sales. The retailer recorded sales of $2.6 billion, compared with $2.7 billion last year.
Comparable-store sales at Saks Holding Co. (SKS) slid 1 percent last month, while Sears, Roebuck & Co. (S), the second-largest U.S. retailer, said domestic same-store sales in September fell 1.7 percent.
Federated Department Stores (FD), owner of Bloomingdale's, Macy's and Burdines, also posted a 0.7 percent drop in sales.
And specialty retailer Talbots Inc. (TLB) said Thursday its sales in the five weeks ended Oct. 3 fell 14.7 percent. Total sales for the period were $95.2 million compared with $109.6 million for the five weeks ended Oct. 4, 1997.
"To a lesser degree, our business was also somewhat impacted by lower levels of traffic during the month. We believe this may have been caused in part by customers waiting to shop for fall clothes until after the later Labor Day this year," the company said.
At the same time, however, KMart (KM) saw its September same-store sales climb 5.6 percent over the year-ago period. Total sales for the five weeks ended Sept. 30 increased 5.8 percent to $2.86 billion.
"September comparable sales were on plan, with strength in home appliances and electronics partially offsetting slow fall apparel results due to unseasonably warm weather," said Floyd Hall, KMart's chairman, president and chief executive officer. "Other categories showing strong performance included home decor, outdoor sporting goods, jewelry, stationery, cosmetics and fragrances, cameras and accessories, consumables, seasonal items and pharmaceuticals."
According to Kurt Barnard, who tracks the industry for the Barnard Retail Trend report, the numbers reflect a definitive shift in consumer spending, driven by stock market volatility and economic uncertainty.
"The consumer is still out there and willing to spend money. However, we are seeing a couple of very interesting things," he said. "Number one, we are seeing there is clearly a deceleration of spending momentum, there's no question about it."
He said more spending money also is being shifted to moderate- and low-priced stores, such as Wal-Mart, Target, KMart and Dollar General.
"People are beginning to be aware of the dollar a lot more than they were before and (they are) a lot more cautious in the way they spend it," he said. "Most regular department stores, like Federated, really did not do well at all."
Dayton Hudson (DH), the fifth-largest U.S. retailer, said comparable-store sales in September rose 5.3 percent over last year, led by a 6.1 percent jump in its Target discount store chain. The company's total retail sales for the five weeks ended Oct. 3 jumped 10.8 percent to $2.5 billion.
Wal-Mart Stores (WMT), the nation's largest retailer, posted a 9.5 percent jump in same-store sales Tuesday for the five-weeks ended Oct. 2. Overall net sales were up more than 15 percent. 
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Wal - Mart
Sears
J.C. Penney
Saks
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