Byline: Carole Emert

WASHINGTON--Retailers are approaching the coming months cautiously after below-plan sales in March and April pushed inventories to unhealthy levels, according to the Federal Reserve's most recent survey of economic conditions.
Retailers in six of the Fed's 12 regional districts reported climbing inventories, according to the report, known as the Beige Book, which was released Wednesday.
Some Philadelphia-area retailers said they "may consider reducing planned purchases of goods if the sales rate does not improve."
In the Dallas district, larger-than-desired inventories at some stores were leading to discounting, the report said.
In the New York region, half the retailers surveyed said March sales were below plan, while only one generated above-plan sales. Inventories were generally higher than expected. However, sales for some retailers rebounded in April.
Several districts also reported rising vendor and raw material prices. In Boston, manufacturers said prices for cotton and some fabrics were up in double digits over last year. Retailers reported corresponding increases in vendors' apparel prices.
"Most [Boston retail] contacts plan zero or very small increases in capital spending and employment this year" due to soft sales and rising vendor prices, the report said.
In the San Francisco region, "department store sales are reported flat compared with the end of 1994, with inventories reported rising at general merchandise stores in California," the Beige Book said.
Cleveland-area discounters reported good retail sales growth overall in April, while specialty shops, such as women's apparel stores, appear to be faring the worst, the report said.
In the Atlanta region, sales were flat in March, but Easter helped retailers in April. Inventories were generally considered at healthy levels, although some retailers said they were too high. "Most retailers anticipate a good, but slowing, second quarter as compared to the first quarter," the survey said.
Apparel manufacturers in Atlanta were among the most optimistic, reporting that a two-year slide in employment at area plants has slowed, while production of denim continued to increase. One jeans maker said it was "booked up through the end of the year."
The jeans maker also noted "there were scattered reports of apparel producers adding to capacity."
Dallas apparel makers, on the other hand, said their costs were going up because of higher prices for cotton and industrial chemicals, but they were keeping a lid on prices because of retailer caution. Retailers there said they were resisting higher manufacturer prices.--Fairchild News Service

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