Consumers curtailed their spending at apparel and discount stores in June, giving the nation’s biggest retailers generally disappointing sales for the month.
The results announced Thursday, coupled with the Commerce Department’s report of a fourth consecutive decline in its main economic forecasting gauge, provided further evidence that consumer spending and the economy as a whole are slowing down.
But some retailers, particularly department store operators and Sears, Roebuck and Co., had a good month, most likely because consumers perceive them as providing better value.
“They’re pretty disappointing,” Karen Sack, a retail industry analyst with Standard & Poor’s Corp., said of the overall sales figures. “There are some good numbers, but generally sales remain weak.”
She said retailers brought business in by marking down prices heavily, which means second-quarter profits may be disappointing for some companies. Dayton Hudson Corp., whose Mervyn’s clothing stores have been struggling, warned today its profits for the quarter, which ends later this month, will fall from year-earlier levels.
Consumers, who grew increasingly frugal during the 1990-91 recession, have kept their cautious ways even when the economy improved. Now, with the economy slowing again, they are cutting back even further on items they don’t really need, especially women’s clothing. And since the economy is dependent on consumer spending for its growth, the renewed caution is likely to further slow the nation’s business activity.
The Salomon Brothers retail index, the investment firm’s barometer of sales performance, rose 3.4 percent after a 4.2 percent gain in May. In June 1994, the index rose 5.8 percent.
Wal-Mart Stores Inc., the nation’s largest retailer, was among those with disappointing results. Wal-Mart said sales from stores open at least a year rose 4.5 percent from last June, while total sales were up 13.8 percent. Those figures are down from Wal-Mart’s usual pace.
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 said same-store sales advanced 4.3 percent and overall sales rose 4.7 percent. The company reported good apparel sales as well as strong business in seasonal items like garden equipment.
Kmart Corp. said same-store sales rose 5 percent, while overall business was up 6.5 percent.
Dayton Hudson said same-store sales rose 2.3 percent while overall business rose 7.9 percent.
J.C. Penney Co. Inc. said same-store sales at its flagship stores rose 0.7 percent, while total sales, including its drugstore and catalog operations, rose 3.4 percent. Penney reported consumer demand was weak on the East and West coasts and along the border with Mexico.
Federated Department Stores Inc. said its same-store sales rose 4.8 percent, while overall business rose 79.6 percent. The overall sales increase reflects Federated’s acquisition of R.H. Macy & Co. Inc. in mid-December 1994.
These results are narrower than the monthly retail sales report from the government, which includes sales from supermarkets, restaurants and car dealers. Those figures will be released July 14.