^^^7:40 AM ET^^^ ECON - Post-attack sales mixedgreenspun.com : LUSENET : Current News - Homefront Preparations : One Thread
From the Chicago Tribune
Post-attack sales mixed at retailers
Staples fare well as clothing falters
By Susan Chandler Tribune staff reporter
October 12, 2001
Spooked by the Sept. 11 terrorist attacks, U.S. consumers stocked their pantries with staples and bought home-related items, but they avoided buying new fall clothes, drastically reducing monthly sales at many of the nation's largest retailers.
Some of the industry's biggest losers included specialty stores such as Abercrombie & Fitch, Eddie Bauer, Gap Inc. and AnnTaylor Stores Corp. Most department store chains, which are heavily dependent on apparel sales, suffered too.
"Traditional department stores got killed. I've never seen anything like it," said Kurt Barnard, president of Barnard's Retail Trend Report in Upper Montclair, N.J.
"Consumers are going to gradually embrace a sense of normalcy again, but they won't buy on impulse. They won't buy frivolously and they definitely won't buy extravagantly."
The month wasn't all gloom and doom. Several discount stores prospered as shoppers loaded up on canned goods, batteries and American flags in the days after the attack and then returned to more normal shopping patterns a few weeks later.
September turned out to be "a little bit surprising on the upside," said Carl Steidtmann, chief economist with Deloitte Research. "Robust consumer spending came back in the last 10 days of the month. A lot of it was pent-up demand."
Still, there's no getting around that the terrorist attacks turned an already weak retail environment into a full-scale spending retreat. Before the numbers came out, one Wall Street analyst predicted September would be the worst month since World War II.
While it doesn't appear to be quite that bad, Steidtmann says the economy is still facing "a fairly extended period of consumer retrenchment." One sign: Rather than spending tax refunds, most Americans chose to sock them away in savings accounts or pay down debt.
Even as life returns to normal, the hundreds of thousands of newly laid-off people will pull back spending even more, hurting such industries as travel, retailing and manufacturing, he said.
Not every retailer posted a sales decline in September, despite the unprecedented store and mall closings that occurred after the attacks. Wal-Mart Stores Inc., the nation's largest retailer, posted a 6.3 percent increase in September sales. Rivals Kmart Corp. and Target Corp. came in with flat sales.
Kohl's Corp. and J.C. Penney Co., both large retailers of clothing, were the exception to the no-apparel rule last month. Sales at Menomonee Falls, Wis.-based Kohl's rose 4.0 percent, while Penneys, which is revamping its stores and merchandise, racked up an impressive 8.1 percent sales increase.
Still, analysts noted that Kohl's is known for its well-priced, basic apparel, a category that fared much better than its expensive high-fashion cousin. Penneys appeared to prosper from its broad offering of private-label apparel, which costs less than brand names.
Sears, Roebuck and Co., the nation's third-largest general merchandise retailer, didn't fare as well. Same-store sales fell 6.7 percent at Sears. However, the disappointing revenue picture was more than offset by expense controls that boosted profit, said Sears Chief Executive Alan Lacy.
"We have been able to weather the difficult top-line environment by effectively managing our retail operating expenses and inventories," Lacy said. He predicted that Sears' third-quarter earnings per share, excluding one-time items, would increase 5.3 percent to 80 cents.
Few other retailers are promising a better bottom line for the third quarter. The nation's already beleaguered department store sector took a beating in September as consumers shifted to lower-price retailers.
Federated Department Stores Inc. felt the sting of Sept. 11 most acutely at its two Manhattan flagships--Macy's Herald Square and Bloomingdale's 59th Street. Sales for the company fell 12.9 percent, which was better than the 15 to 20 percent decline some were expecting.
Lost sales at the two Manhattan flagships accounted for 1 percent of the decreased sales, Federated said. Looking forward, the retailer said it expects October sales to be down between 7 and 10 percent compared with last year.
May Department Stores Co., parent of Lord & Taylor, also was punished, with sales off 10.9 percent. But that looked like a mere slap on the wrist compared with the 23.5 percent plunge at Saks Fifth Avenue, the high-end chain.
Marshall Field's, the department store division of Target Corp., escaped relatively unscathed, however, posting a 1.9 percent sales increase. A new advertising campaign may have helped those results, experts said.
It was the nation's specialty apparel stores that suffered the steepest declines across the board. Sales at Abercrombie & Fitch, the preppy teen retailer, fell 18 percent. They were off 13.9 percent at AnnTaylor, the women's career apparel merchant, and 10 percent at Limited Inc.
Meanwhile, sales plummeted 21 percent at Eddie Bauer, the casual apparel chain that is part of Downers Grove-based Spiegel Group, and shoppers continued to shun struggling Gap Inc., the casual apparel giant. Sales for the company's three divisions declined 17 percent. Gap stores and Old Navy, the company's discount chain, bore the brunt of it with sales falling almost 20 percent.
-- Anonymous, October 12, 2001