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Weather, economy lead to dropoff in February

NEW YORK -Bad weather, both the natural and the economic kind, bested U.S. retailers as they began their official new year.

The first retail month of 2001 saw the major U.S. chain-store operations in a down mood. Exactly one-half of the major chains tracked by Home Textiles Today in its monthly chain-sales report said their same-store sales fell in February, compared with the results from February of last year.

Among those that fell the farthest, Pamida (reporting its full monthly results for the first time as part of the ShopKo corporate operation) led the pack with a 7.6 percent drop in its comp-store results.

Two regional discounters, Value City and Ames, also plummeted. Value City's same-store sales dived 6.5 percent in February, and Ames saw its comp-store sales fall 5.3 percent.

Joe Ettore, chairman and ceo of the latter chain, said February actually got off to a good start for Ames. Then came the rough weather of the latter half of the month, which "caused us to fall $11 million short on sales. This will now be part of our March challenge," Ettore said.

By no means were regional chains the only ones that had to weather a storm. February also saw steep drops in comp-store results from the Marshall Field's segment of Target Corp. (off 4.6 percent), Ross Stores (down 4 percent), Saks department stores and Mervyn's (each down 3.6 percent), JCPenney (down 2.1 percent) and Dillard's and Sears (off 2 percent each).

Sears chairman and ceo Alan Lacy said, "February proved to be a challenging month with retail sales falling below expectations, as the impact of the slowing economy was felt across both our hardlines and softlines businesses."

The month did produce one double-digit gainer in same-store sales: ShopKo's stores division, which fattened its comp-store sales by 10.4 percent. But, as the company admitted, the jump was due, in a large part, to liquidation sales at 23 stores that are scheduled to be closed at the end of the first quarter. Take those numbers away, and ShopKo stores' comp sales actually fell 0.7 percent.

Gottschalks posted a more genuine pickup of 7.5 percent in its same-store sales last month. The Fresno, CA-based department-store chain got boosts from a strong Valentine's Day promotion, which increased sales of cosmetics and fragrances; and from solid sales gains in furniture and mattresses, said the company's president and ceo, Jim Famalette.

In the face of the predominant bad news among most retail chains, Kohl's chugged along. The Menomonee Falls, WI, powerhouse posted a 7.3 percent hike in its comp-store results last month.

The national mass merchants all reported modest gains in February, with Wal-Mart's 4 percent same-store sales gain leading the way in this channel. Kmart finished second at 3.3 percent, and Target stores limped in with a 2.9 percent increase.

"February marks our fourth consecutive month of strong same-store sales as we are closing the gap with our competition," said Kmart chairman and ceo Chuck Conaway.

Regarding the overall picture presented by the chain results, Michael Niemira, retail analyst for the Bank of Tokyo Mitsubishi Ltd., saw them as the continuation of a trend in the industry that took hold beginning in December.

"February 2001 sales were on [plan] to below plan for most retailers, with the largest percentage of the sample [surveyed by the bank] posting declines on a year-over-year comparable-store sales basis since July 1996," Niemira said. He also noted that measures of retail traffic were down during the month, "which added to the challenge for the stores.

"The upcoming year is likely to be challenging for the retail industry as they adjust their business and expansion plans to slower consumer demand. Over the upcoming month, the Easter shift should help to boost the year-over-year comparisons for March."

Kelly Whitman, economist with Economy.com, noted the impact of the "slower economy" in the February same-store results. "Consumers have become more vigilant in their spending habits, which was reflected in the modest strength of discount and wholesale stores compared to the poor performance of traditional department and specialty apparel stores," Whitman said.

She added that consumer confidence would likely keep retailers from any bouts of prosperity in the near term, as news of higher energy prices, layoff announcements and the bear market maintains the gloom in the nation's economy. Yet "consumers are not so concerned about recession that they have cut off spending altogether," she said.

Whitman predicted that further interest rate cuts by the Federal Reserve should bring about "modest but still cautious consumer spending going forward."

FEBRUARY SALES FOR MAJOR RETAILERS / PERIOD ENDING 3/3/01a (sales in $000s)


COMPANY 2001 SALES 2000 SALES TOTAL % CHANGE SAME STORE % CHANGE

Ames

$229.8

$227.6

1.0

-5.3

Costcob

2,450.0

2,210.0

10.9

5.0

Dillard Dept. Stores

623.8

642.1

-2.9

-2.0

Dollar Generalc

367.1

307.2

19.5

4.7

Elder-Beerman

39.7

39.1

1.5

0.7

Family Dollar

266.4

230.7

15.5

5.0

Federated Dept. Stores

1,150.0

1,211.0

-5.0

NA

Dept. stores

1,081.0

1,083.0

-0.2

-1.6

Gottschalks

45.1

34.1

32.3

7.5

J.C. Penney total sales

2,314.0

2,332.0

-0.8

NA

JCPenney stores

858.0

892.0

-3.8

-2.1

Catalog

275.0

308.0

-10.7

NA

Kmartd

2,447.0

2,413.0

1.4

3.3

Kohl's Corp.

334.5

260.4

28.5

7.3

May Dept. Storese

937.0

909.0

3.1

-1.1

Pier 1 Imports

117.5

83.9

40.0

4.7

Rossb

181.0

176.0

2.8

-4.0

Saks Inc.

414.1

414.4

-0.1

-1.3

Dept. stores

238.9

246.9

-3.2

-3.6

Sears domestic stores

1,967.4

1,996.6

-1.5

-2.0

ShopKo Inc.

247.7

220.7

12.2

6.5

ShopKo stores

192.4

NA

13.2

10.4

Pamida

55.3

NA

13.2

-7.6

Target Corp.

2,455.0

2,252.0

9.0

3.7

Target

1,990.0

NA

11.9

5.2

Mervyn's

254.0

NA

-2.4

-2.4

Dept. stores

170.0

NA

-1.7

-2.6

TJX Cos.

647.0

605.0

6.9

-1.0

Value Cityf

139.9

113.9

22.8

-6.5

Wal-Mart Stores Inc.c

14,885.0

13,316.0

11.8

4.3

Wal-Mart stores

NA

NA

NA

4.0

Sam's Club

1,991.0

1,838.0

8.3

5.6


Since February is the first month of the retail year, there are no year-to-date figures yet.

a: Reporting periods vary from store to store.

b: For the period ending March 4.

c: For the period ending March 2.

d: For the period ending Feb. 28.

e: Excludes sales of stores that have been closed and not replaced.

f: 2001 sales include sales of Filene's Basement, acquired in March 2000.

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