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Retailers feel April chill as tax refunds shrink


Dreary weather, tax talk and emaciated IRS refund checks combined to make April yet another cruel month for U.S. retailers.

Parentheses (which indicate a negative in financial reports) were flying yesterday as the nation's largest chains reported last month's comparable-store sales, those at stores that were also open last year.

Otto Grote, retail analyst with Derby Securities in New York, said the causes for the April downturn were "70 percent weather and 30 percent politics."

Chains that deal in clothing and seasonal items took an especially big hit as cold, rainy weather dominated much of the country early in the month.

"When it's 60 degrees out, you're not going to be buying shorts yet -- or gas grills," said Linda Morris, retail analyst with PNC Financial Corp. in Philadelphia. She noted that April this year was being compared with a warm April last year.

This year's chill affected such apparel retailers as Joppa-based Merry-Go-Round Enterprises Inc., down 6 percent; Ross Stores, down 4 percent; Charming Shoppes Inc., down 1 percent; and The Limited Inc., unchanged. May Department Stores Co., St. Louis-based parent of Hecht's, managed a 1 percent gain.

Among the few "stars" were Sears, which posted a 5 percent gain; J. C. Penney Co., which gained 4 percent despite a difficult comparison against a rip-roaring April 1992; and Caldor Corp., up 7 percent.

Analysts said the political climate, with its pervasive talk of new taxes to pay for President Clinton's health care plan, was no more hospitable to sales than the weather. "These trial balloons you've had -- that puts some uneasiness in the consumer's mind," Ms. Morris said .

Election-year tax policy also had its grip on sales, as billions of dollars in lost tax refunds were vacuumed out of the consumer economy -- the result of President Bush's decision to cut withholding taxes last year. Mr. Grote cited estimates that the impact on the economy this spring could reach $15 billion to $20 billion.

Hechinger Co., a Landover-based home improvement chain, managed to eke out a respectable 3 percent increase in comparable-store sales as a 2 percent decline in its Home Quarters division partly offset a strong 8 percent showing in its Hechinger Stores division, which is centered around Baltimore and Washington.

Also hurt badly last month were the warehouse clubs.

Weak sales at these wholesale-retail outlets helped drag down the performance of the nation's two largest retailers. No. 1 Wal-Mart Stores Inc. showed a comparable-store sales gain of 6 percent, impressive for most retailers but slight by Wal-Mart standards, as sales at its Sam's Club chain remained flat. Kmart Corp. finished the month with an anemic 1 percent increase, hobbled by a 7.1 percent decline at its PACE Membership Warehouse chain.

In all, according to the Dow Jones New Service, of the 54 companies that reported sales yesterday, 26 recorded lower or flat comparable-store sales, and eight came in at an anemic 2 percent or less.

Nevertheless, analysts detected some bright spots.

Ms. Morris said consumers were buying durable goods, including autos, indicating that they were more confident in their actions than in what they told survey-takers.

"It takes a lot more confidence to buy something on time than to pick up a T-shirt and shorts," she said.

Among the areas of robust sales were furniture and consumer electronics, Ms. Morris said. That strength showed up in the sales of Richmond, Va.-based Circuit City Stores Inc., which posted a 9 percent gain in comparable-stores sales.

As bleak as April's figures looked, Mr. Grote said, there were signs that sales were picking up toward the end of the month and into the first week of May.

After three bad months that could be blamed on the weather or on quirks of the calendar, investors and economist will be watching the May figures especially carefully, Mr. Grote said.

"May is going to be the first big indicator you have in the current year. It's a normalized month," he said.

"My feeling is that sales are going to be better, but not a lot $$ better."

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