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Retailers Report Disappointing Sales

Retailers Report Disappointing Sales

Posted - Mar. 6, 2003 at 10:38 a.m.



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NEW YORK (AP) -- Winter storms and worries about war gave consumers more reasons not to shop in February, and that left the nation's retailers with another month of disappointing sales.

As storeowners reported their February results Thursday, Wal-Mart Stores Inc. announced sales at the low end of its expectations, and apparel retailers and department stores were again the hardest hit.

Consumers had no incentive to buy spring fashions like micro mini skirts in the frigid cold, analysts said.

But some retailers were exceptions, including Pacific Sunwear of California Inc. and Gap Inc., both of which reported that same-store sales -- sales at stores open at least a year -- beat Wall Street expectations. Same-store sales are considered the best gauge of a retailer's health.

Overall, though, "this was a weak reading, and it is the same story line. But the only difference is that the weather complicated the issue," said Michael Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. "Weather is a passing problem, but concern about war and the economy is a lingering issue and therein lies the problem."

Bank of Toko-Mitsubishi's same-store sales tally of 69 stores was up only 0.4 percent in February, compared with an increase of 6.2 percent a year ago, when unusually warm weather helped spur sales of spring clothes.

Niemira said it was the weakest performance since last November, when the index was unchanged.

The biggest blow in February came when a snowstorm blanketed the Northeast during Presidents Day weekend, forcing many stores to close and wiping out the much-anticipated sales bonanza needed to jump-start the spring season. Niemira estimated the snowstorm shaved off about 0.5 percentage point from the monthly sales figures.

For example, Sears, Roebuck and Co., which announced disappointing sales, said it had to close 130 stores and key distribution centers during the long holiday weekend, wielding a "significant impact on sales."

Meanwhile, a report from the Labor Department underscored a sluggish economy, announcing that new claims for unemployment benefits rose last week to their highest level of the year, marking the third week in a row that layoffs increased. The government reported that initial applications for unemployment insurance increased last week by a seasonally adjusted 12,000 to 430,000.

Such a weak environment is stalling sales even at discount chains, like Wal-Mart, which reported a modest 2.6 percent increase in same-store sales, in line with the consensus from Thomson First Call. It was at the low end of the company's goal for a 2 to 4 percent increase. Total sales were up 9.2 percent.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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