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News > Companies
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Chain store sales drop
graphic October 11, 2001: 12:41 p.m. ET

Nation's retailers post lower sales in September, most citing Sept. 11 attacks.
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  • Several retailers warn on third-quarter results, cite attacks - Oct. 11, 2001
  • Retailers face sharply lower sales - Sept. 20, 2001
  • Retailers to post weak second quarter - June 25, 2001
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  • National Retail Federation
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    NEW YORK (CNNmoney) - Many of the nation's retailers posted a sharp drop in September sales Thursday as consumers hunkered down after the Sept. 11 terrorist attacks that killed thousands in New York and Washington.

    As anticipated, discount chains and wholesale clubs led by Wal-Mart Stores Inc. fared the best in the period, as consumers stocked up on everyday items such as food and pharmaceuticals  and mixed in some bargain hunting.

    Department stores and specialty shops again took the biggest hits, as shoppers shied away from big-ticket purchases, luxury items, and high fashion apparel.

    A separate report on chain-store sales from the Bank of Tokyo-Mistubishi indicated overall September sales grew a weak 0.8 percent compared with a 3.6 percent year over year gain in August. The report attributed most of the weakness to the Sept. 11 terrorist attacks.

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    September's sales results reflect a theme that has extended throughout the year as consumers shifted to mass merchants in response to the slowing economy marked by massive layoffs, particularly in manufacturing, high energy prices and a volatile stock market.

    "What we have seen is a continuation of an economic downturn accompanied by a downturn in consumer confidence and employment that started and gathered speed long before Sept. 11," said Kurt Barnard, president of Barnard's Retail Trend Report in Upper Montclair, N.J.

    Consumer confidence was just beginning to show signs of wear when terrorists hijacked four commercial jets Sept. 11, crashing two into the World Trade Center and one into the Pentagon. The attacks destroyed the financial complex in New York and a large section of the Defense Department headquarters, leaving more than 6,000 people missing or dead.

    The somber mood and fear of other attacks combined with uncertainty about whether the tragedy would push the United States into a recession caused an even sharper slowdown in consumer spending, which fuels two-thirds of the economy.

    Sales did recover a week after the attacks, but again, most of those sales reflected Americans stocking up on food, prescription drugs and everyday items, rather than a vigorous will to shop for gifts, clothes, cars and other discretionary items.

    "All apparel-based retailers got creamed. They lost much of their market share to discounters," Barnard said.

    However, industry leaders remain optimistic that consumers will bounce back as the holiday season draws closer.

    "Overall this isn't real shocking, and I think in some ways for us it's kind of 'get on with it,'" said Sarah Scheuer, a spokeswoman for the National Retail Federation. "September is over and the shock factor is starting to wane a bit for most consumers. We're starting to see more normal traffic."

    Bentonville, Ark.-based Wal-Mart (WMT: down $0.14 to $53.49, Research, Estimates), the world's biggest retailer, turned in the best performance in September, posting a 6.3 percent sales increase at stores open at least a year, a key retailing gauge known as same-store sales. That's up from a 5.3 percent gain in the year-earlier period.

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    The company's Wal-Mart stores posted a 6.7 percent same-store sales gain, while its wholesale Sam's Club division had a 4.6 percent increase. Overall sales rose 14.8 percent to $17.3 billion.

    Sears Roebuck & Co. (S: up $2.18 to $41.00, Research, Estimates), the nation's No. 2 retailer, reported a 6.7 percent decline in domestic same-store sales for September, citing the effects of the terrorist attacks. However, the Hoffman Estates, Ill.-based chain raised third-quarter guidance to 80 cents a share for the quarter ended Sept. 29, 3 cents better than Wall Street forecasts, according to earnings tracker First Call.

    The company, which is in the midst of revamping its operations under new CEO Alan Lacy, cited streamlining costs and managing inventory. Gross margins also improved as Sears put more focus on appliances and hardware, which consistently have performed well this year.

    Federated Department Stores Inc. (FD: Research, Estimates), which operates Macy's and Bloomingdale's, reported a 12.9 percent drop in same-store sales. The Cincinnati-based company said same-store sales for October are likely to be 7-to-10 percent below year-ago levels. Federated said it still is evaluating third- and fourth-quarter performance in light of the attacks and that it plans to issue revised guidance once a clearer picture emerges.

    Federated said sales actually were better than expected in the immediate wake of the attack, when the company thought same-store sales would fall 15-to-20 percent in the month.

    No. 3 retailer Kmart Corp. (KM: Research, Estimates) said same-store sales were flat compared with a year ago, but cited the liquidation of $40 million worth of discontinued inventory a year ago as creating tough comparisons. Excluding the inventory reduction, Troy, Mich.-based Kmart, in the midst of a massive restructuring, said same-store sales would have increased 0.7 percent in September.

    May Department Stores Co. (MAY: up $2.71 to $33.56, Research, Estimates), owner of the Lord & Taylor, Hecht's and David's Bridal chains, reported a 10.9 percent decline in same-store sales, saying they dropped sharply after the terrorist attacks.

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    Saks Inc. (SKS: up $0.27 to $7.10, Research, Estimates), a luxury department store chain, reported an 11.5 percent decline in September sales, also blaming the attacks.

    And Gap Inc. (GPS: up $0.15 to $13.73, Research, Estimates), operator of Gap, Banana Republic and Old Navy stores, said same-store sales fell 17 percent in September compared with an 8 percent decrease the previous month.

    The company, which has been struggling with lower sales, squarely blamed missed sales expectations at the Gap and Old Navy divisions for the shortfall, particularly in light of the terrorist attacks. San Francisco-based Gap also said it expects to record a $140 million-to-$150 tax charge in the third quarter as the result of foreign and domestic tax audits.

    Chief Financial Officer Heidi Kunz said that, at present, "We do not see an improvement in comparable-store sales in October," and that margins remain under considerable pressure as the company continues to mark down fall merchandise to make room for holiday inventory.

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    "Given the results of the quarter to date and this outlook for October, we currently expect earnings in the quarter to be negative, before considering the tax-related charges also disclosed today," Kunz said.

    Family Dollar Stores Inc. (FDO: up $0.91 to $28.75, Research, Estimates) posted a 6.7 percent increase in September sales, noting that hard line goods, such as everyday items like toothbrushes, gifts and the like, performed better than soft lines, which consists primarily of apparel.

    B.J.'s Wholesale Club Inc (BJ: up $1.50 to $51.51, Research, Estimates) posted a 3.3 percent increase in the period, again reflecting the buying patterns of consumers stocking up on food and other everyday items in the wake of the terrorist attacks.

    And discounter Target Corp. (TGT: up $0.74 to $33.05, Research, Estimates) had a 0.2 percent increase in the period. The Minneapolis-based chain said its Target unit performed well in the period, but that results at its Marshall Field's and Mervyn's department stores were weak.

    AnnTaylor Stores Inc. (ANN: up $1.19 to $25.78, Research, Estimates)  posted a 13.9 percent decline in same-store sales compared with a 1.3 percent increase a year earlier.

    Two smaller firms, home goods retailer Pier 1 (PIR: Research, Estimates) and women's clothing chain Talbots Inc. (TLB: Research, Estimates), also raised earnings guidance despite lower September same-store sales. graphic

      RELATED STORIES

    Several retailers warn on third-quarter results, cite attacks - Oct. 11, 2001

    Retailers face sharply lower sales - Sept. 20, 2001

    Retailers to post weak second quarter - June 25, 2001

      RELATED LINKS

    National Retail Federation





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