WALL STREET SEES YULEAS TURNAROUND TIME FOR WOMEN'S APPAREL

NEW YORK--Wall Street says women's wear is due.
This Christmas could be pivotal, according to analysts. Despite lackluster apparel sales for back-to-school, many are confident about Christmas '94, and say an underperforming women's business is poised to gain from a cyclical shift away from big-ticket hard goods.
Department stores are expected to rack up the strongest apparel gains, with the best results coming at J.C. Penney Co., Nordstrom Inc., Sears Merchandise Group, May Department Stores Inc., and Federated Department Stores Inc.
Apparel specialty stores are expected to remain under pressure, but should show some improvement. The top performers here are expected to be Ann Taylor Stores Inc., The Gap Inc. and Talbots Inc.
Off-price and factory outlet apparel stores are expected to continue to be hurt by perceived lower prices at department stores and upgraded merchandise at discount stores.
Most analysts blamed soft women's sales in the back-to-school period on unseasonably warm weather as shoppers increasingly buy according to need.
Some analysts expect soft lines to start outperforming hard lines in the second half as demand for durables wanes and interest rates rise to squelch demand for houses and related home goods. They also note that women have not invested in apparel in large numbers for several seasons and there's a growing need for both updated styling and replacement purchases.
Sales forecasts range from increases of 5.5 to 8.5 percent for the holiday period, which compares with gains of 8.2 percent in 1993 and 8.9 percent in 1992.
Peter Schaeffer, at Dillon Reed, said apparel sales should be strong in October and early November as shoppers, recalling the bitter weather in January and February of 1994, stock up on winter merchandise. However, he expects sales to slow as bills arrive for the cars, televisions and many durables bought earlier in the year.
"I think people are going to have second thoughts about how much they can spend for Christmas," Schaeffer said. "I'm not anticipating a terrible Christmas, but weaker than the past two years."
Schaeffer said he sees no clear fashion trend to spark apparel sales this year, but a trend toward short skirts and short dresses for spring should help lead to a rebound by the third quarter of 1995.
Thomas H. Tashjian, at First Manhattan, expects sales this year to be led by strength in apparel, jewelry, and small home furnishing items after two years of big-ticket purchasing. He said apparel should benefit from increased job growth, higher interest rates, planned hikes in advertising at the stores versus 1993 and easy comparisons going against generally lackluster apparel sales in the year-ago period.
Walter Loeb, at Loeb Associates, also looks for some improvement in apparel this year, and expects to see a rebound in 1995.
"I see a definite interest in the fashion being shown, particularly the more form-fitting garments and the more colorful ones."
Loeb also said the strength in men's wear in the stores indicates "there may be more discretionary spending power" because men's is usually the most postponable classification.
Edward F. Johnson, at Johnson Redbook Service, is one of the few predicting the Christmas season this year will be stronger than 1993.
"I think women will be spending more on apparel than they have earlier in the year and that's going to be a big help," he said. He noted that women historically spend twice as much on apparel than men.
Robert F. Buchanan, at NatWest Securities, was the most pessimistic, saying other analysts have focused too much on the newness of fashion items.
"While there is certainly good fashion in the stores, I think there's been a shift in priorities of consumers, and women lack the spending power on fashion once they spend money on a variety of things, from retirement funding to their kid's education."
J.C. Penney's earnings are expected to rise to about $4.10 to $4.25 a share this year, which compares with $3.60 in 1993. Analysts said the company has translated a lower cost structure into lower pricing for its customers and has benefited from its successful private label program.
Nordstrom is expected to earn from $2.40 to $2.45 a share this year against $1.71. Steven Kernkraut, at Bear Stearns, said Nordstrom has upgraded its inventory control systems to better control markdowns, and is also benefiting from a strong private label program, May should earn about $3 against $2.65, and Federated, $1.75 against $1.45, excluding charges resulting from its merger with R.H. Macy & Co. Mercantile Stores estimates range from $2.70 to $2.83 against $2.35.
Despite strong results expected from its merchandising unit, Sears' earnings will probably fall to around $3.30 from $4.36, dragged down by poor results and special charges at its Allstate subsidiary. Schaeffer, at Dillon Reed, expects both apparel and home to be strong for Sears in the holiday period and he looks for continued strength in 1995 as Sears makes a big push to get new customers. For 1995, analysts look for Sears to make $5 to $5.40 a share.
For Dillard's, analysts look for a slight gain, with estimates ranging from $2.15 to $2.30 versus $2.14. Dayton Hudson's earnings are expected to rise to a range of $5.50 to $5.78 from $4.95 in 1993, driven by a strong performance by Target Stores.
For Gap Inc., analysts are looking for $2.10 to $2.25 against $1.78. Analysts said The Gap Stores plan to lower some price points and increase its emphasis on men's starting in holiday period to spark overall sales. Banana Republic and Gap Kids chains continue to perform well. Ann Taylor's estimates for the year range from $1.40 to $1.50 this year against 66 cents. Talbots is expected to net around $1.50 versus $1.20.
The Limited's estimates range from $1.08 to $1.25 against $1.08 in 1993. Most analysts expect The Limited's struggling women's chains to continue to show negative same-store sales, but better inventory controls should lift operating profits.
Among discounters, Wal-Mart Inc. is expected to earn $1.19 to $1.23 against $1.02, helped by some improvement in Sam's Club's and continued strong performance at its discount chain.
Kmart, which is going through a major restructuring, is expected to earn $1.25 to $1.30 versus a depressed $1.15 in 1993.
Caldor is expected to net $3 this year versus $2.50; Bradlees, $1.75 to $1.84 this year versus $1.38 in 1993; Dollar General, $1.25 this year against 90 cents, and Venture $2 this year, down from $2.43.
Profits at TJX Cos. Inc. are expected to fall to a range of $1.36 to $1.45 against $1.62, and Charming Shoppes Inc's are expected to fall to about 65 cents a share from 70 cents.
So far this year, hard goods have been a driving force behind many of the majors.
In the second quarter, profits for 50 retailers rose 17.1 percent while sales gained 10.2 percent.
In the half, earnings climbed 20.9 percent, with sales ahead 11.2 percent. (See chart.)

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