NEW YORK — Falling temperatures helped boost apparel sales last week and, for a few retailers, raise stock prices on Monday.
This story first appeared in the October 22, 2002 issue of WWD. Subscribe Today.
However, even those stores benefitting from a drop in temperatures don’t expect the cooling trend to materially affect sales for the current month.
Wal-Mart Stores Inc. said last week’s same-store sales were on plan, and its shares rose 0.2 percent to $56.40, as Federated Department Stores Inc., also on plan, picked up 2.3 percent to $32.04. J.C. Penney Co. Inc., which pushed ahead of plan, got a 5.4 percent boost in its stock price, and ended the day at $18.01.
Warning weak mall traffic hurt its bottom line in the first quarter, Zale Corp. saw its stock drop 3.9 percent to $28.80. Bankrupt Kmart Corp. managed to taper declines in its sales in September, but still carried a hefty loss for the month.
The Dow Jones Industrial Average shot up 2.6 percent, or 215.84 points, to 8,538.24, while the Standard & Poor’s 500 advanced 1.7 percent, or 15.33 points, to 899.72. Though not quite as strong, the S&P Retail Index still inched up 0.4 percent, or 1.05 points, to 291.72.
Comparable-store sales last week at Wal-Mart were on track for a 2 to 4 percent increase for the month. The flagship division’s sales were in line with the overall company, while Sam’s Club fared worse with comps below both plan and the 2 to 4 percent range.
“Sales did improve in apparel when temperatures reached a more normal seasonal level,” said a spokeswoman on a recorded call. Halloween sales in all categories tracked below plan, though. Among the strongest categories for the total firm last week were apparel, intimate apparel and home furnishings.
Sales during the second week of the month also picked up for Federated as the weather turned cooler. “However, one week does not necessarily indicate a trend, and we continue to expect comp-store sales for the month of October as a whole to be down in the 1 to 2 percent range,” said the firm on its Web site.
Running counter to trend, Penney’s noted sales through the third week of its fiscal month were “significantly above plan” and headed toward at least a high-single-digit comp increase. The month’s plan was for an uptick in the 3 to 4 percent range. Best-selling categories were children’s, men’s and women’s apparel.
Zale warned that less traffic in shopping malls would drag its first-quarter bottom line down to a loss of 19 to 21 cents a share. Wall Street had been looking for a deficit of 10 cents for the period ending Oct. 31. Before a change in accounting principle, Zale had a a 10-cent-a-share loss in the year-ago quarter.
The Dallas-based specialty retailer of fine jewelry blamed the reduction on “challenging trends” in August and September, specifically with respect to mall counts. The weaker traffic had a material impact on sales and gross margins in Zale’s Piercing Pagoda business. However, Mary Forte, president and chief executive officer, in a statement, asserted: “We are well-positioned to continue to gain market share during the upcoming holiday season.”
While recent sales trends improved, Kmart still posted a net loss of $176 million for September. As reported, Julian Day, Kmart’s president and chief operating officer, recently said Kmart might be able to exit Chapter 11 as early as March. As of Sept. 25, about $1.5 billion was available under its debtor-in-possession facility.
The discounter’s September comps slid 6.9 percent, after falling 11.9 percent in August. Since entering bankruptcy in January, Kmart’s monthly comps have averaged about an 11 percent decline.
Kmart expects to finish drawing up a five-year business plan by yearend and file a proposed plan of reorganization and disclosure statement with bankruptcy court on or before Feb. 24.