Nation's retailers report September sales weaker than expected Concern grows that the weak sales will continue through Christmas.


The nation's largest retailers said yesterday that their September sales were even weaker than expected, heightening concern that consumer spending would not pick up in time to prevent a third disappointing Christmas in a row.

Merchandise sales at Sears slipped, while those at J.C. Penney were essentially flat. Even K mart's discount stores, which generally turned in robust sales during the recession, showed a decline last month.

But Wal-Mart and the Gap continued to stand out against the industry's lackluster results. Sales rose 32 percent at Wal-Mart, the nation's largest retailer, and 41 percent at the Gap.

Mostly, however, the September sales results indicate that consumers are extremely wary, retailers and analysts said yesterday, as they are faced with gloomy employment figures and high consumer debt.

"Despite what economists have said about the economy being in a slow recovery, nobody has told the consumer yet," said Jeffrey B. Edelman of C.J. Lawrence Inc.

Until September, the white-collar nature of the recession had taken a greater toll on department stores and more expensive retailers. "This month, everybody had a disappointment," said Daniel Barry, an analyst with Kidder, Peabody & Co.

The weakness was widespread, cutting across all categories of retailing. The Merrill Lynch index of 22 leading retailers showed that September sales were up by only 1 percent over the period last year.

The index compares sales of stores that have been open at least a year, or same-store sales, which analysts view as the best barometer of performance.

Jeffrey Feiner, an analyst with Merrill Lynch & Co., called sales for the month "disappointing and below expectation."

The weak results were particularly troubling because retailers' results were being compared with September of last year, which was one of the worst retailing months in 1990, because of the drop in consumer spending after the invasion of Kuwait last August.

At Sears, Roebuck & Co., the sales at its merchandise group fell by 1 percent for the month. The Chicago-based retailer's same-store sales for the month were off by nine-tenths of a percent.

J.C. Penney & Co., which is based in Dallas, reported that its overall sales were up by four-tenths of a percent, while those at its same stores were down by the same amount.

At the Gap Inc., its same-store sales were up strongly, by 20

percent, compared with an overall sales gain of 41 percent. The company, based in San Francisco, offers a frequently changing line of casual clothes in attractive stores.

"Denim is the hottest thing out there in Retail-land," said Thomas Tashjian, an analyst at First Manhattan Co.

Wal-Mart Stores Inc., based in Bentonville, Ark., also continued to outpace its competitors. Its overall sales gain of 32 percent included the results of McLane Co., a retailer acquired last year. Excluding McLane's results, Wal-Mart's September sales were up by 24 percent.

Sales at Wal-Mart's same stores rose by 7 percent.

There were signs, however, that the sluggish sales climate has begun to filter down to discounters, which have been one of retailing's bright spots this year.

Sales at K mart Corp.'s stores were down slightly last month. The company, based in Troy, Mich., does not publicly release separate sales information for its stores, but it confirmed that it had told analysts of the decline.

The retailer attributed the drop to the prolonged warmer weather, which can hurt fall apparel sales, as well as the weak economy, which dampened spending on big-ticket items.

While sales at K mart's discount-store operation were down slightly for the month, the company said its September sales increased by 5.3 percent overall. Those at its same stores rose by 1.4 percent.

But despite yesterday's gloomy results, several large retailers told analysts that their sales for the first week of October were robust.

Last month, retailers were forced to cut prices to lure consumers into stores. "Frankly, too much of our business is being done on promotion or some kind of value price situation," said Stephen E. Watson, the president of Dayton Hudson Corp. in Minneapolis.

But in contrast to markdowns taken last year to move surplus inventory, the analysts said that this year retailers ordered more cautiously and they are using markdowns to draw in consumers and increase market share.

"Retailers are acting in a much more prepared fashion," said Tashjian of First Manhattan.

Still, Feiner of Merrill Lynch said that September's weak sales were likely to make retailers even more cautious about inventory levels for the rest of the year, especially as the holiday season approached.

"We expect to see some cutbacks, in terms of merchandise commitments for Christmas," he said. Such a move by retailers could ripple through the economy, hurting clothing manufacturers, he said.

At Dayton Hudson, its overall sales were up 9.1 percent last month, with those at its same stores gaining 5.1 percent. Sales at its Target discount unit rose by 12 percent, with those at Target stores open for more than a year increasing by 7 percent.

May Department Stores Co., based in St. Louis, said its overall sales rose by 8.3 percent, while its same-store sales rose slightly, by four-tenths of a percent.

The Limited Inc., with headquarters in Columbus, Ohio, said its September sales increased by 16 percent over all, while those at its same stores grew by 4 percent.

The New York-based Woolworth Corp. said its total sales dropped by 1.9 percent in September.

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