MARCH APPAREL SALES SOUR AT MOST CHAINS
Byline: Diane E. Picard / With contributions from Alexandra Zissu / David Moin
NEW YORK — With stores barely able to capitalize on the Easter holiday or new spring goods, March apparel sales proved to be a bust at major retailers, with a few exceptions. The reasons, according to analysts, were bad weather, cutbacks on sales promotions and a touch of consumer apathy when it came to clothes.
Some also said that Easter backfired. Generally, planning around the holiday period was conservative. Still, with the holiday falling on March 30, a week earlier than in 1996, some chains expected spring goods to start moving, but found themselves losing ground, particularly with their stores closed on Easter Sunday. Many expect to bounce back this month, as the weather turns more seasonal.
On Thursday, a host of department stores reported disappointing numbers. Federated Department Stores said same-store sales dipped 0.2 percent while May Department Stores was flat, Dillard Department Stores inched ahead 1 percent, Sears Roebuck rose just 1 percent and Mercantile Stores was up 0.6 percent. On Tuesday, J.C. Penney Co. reported a 3.7 percent decline in comps.
Robert F. Buchanan, retail analyst at NatWest Securities, said March wasn’t affected much by the weather or the holiday. He blamed it on weak spring merchandise and said it’s a problem that could linger until fall.
“It’s a hodge-podge of looks, but none of it seems to be exciting women shoppers,” Buchanan said. “In short, March was a bomb.”
Still, retailers saw some pockets of strength.
Sears’ chairman and chief executive Arthur Martinez noted in a statement, “Sears full-line stores generated double-digit increases in women’s rtw and cosmetics and fragrances.” Junior’s, special occasion and special sizes were also strong.
Also, Bloomingdale’s executives have been talking up recent results with several designers, including Ralph Lauren, and contemporary sportswear vendors, including Laundry, Eileen Fisher, BCBG and Parallel.
Maura Hunter Byrne, retail analyst at J.P. Morgan Securities, agreed that there are some strong merchandise offerings, but said the business, so far, has been hampered with Easter leaving the month with one less weekend selling day.
Retailers say it’s too soon to judge spring and prefer to combine March and April results to more accurately gauge the season. Allen Questrom, Federated’s chairman and ceo, said in a statement, “When April results are in, we expect the first quarter to be consistent with our 2 1/2-3 percent comp-store sales increase expectations for the year.” He said last month’s relatively flat sales reflected a change in the promotional calendar triggered by the earlier Easter.
Saks Holdings Inc. inched ahead 1.5 percent. “This performance was led by our full-line, resort and Main Street stores, which posted a comparable sales increase of 3.1 percent,” said Philip B. Miller, chairman and ceo, in a statement. Saks also operates outlets and a catalog business. “Strong performances in our designer apparel and accessories business were offset somewhat by softer performances in some of our bridge apparel categories.” Shoes, jewelry, special sizes and evening dresses performed well.
In contrast, the Neiman Marcus Group was up 8.7 percent and Ann Taylor, rose 7.4 percent. Neiman Marcus same-store sales were up about 8.7 percent, while Bergdorf Goodman comps were up in the low single digits. NM Direct sales were up in the mid-teens.
Limited Express took another dive. With comp sales sinking 31 percent, the company is reportedly not expecting a good season overall and is now looking to fall for improvement.
Steve Kernkraut, at Bear Stearns, said mall-based stores turned in weaker than expected performances, while strip center stores showed stronger comps.
“Most department stores had planned only flat or just slightly higher comp sales for March and had appropriately low inventories,” said Tom Tashjian, at Montgomery Securities. “In contrast, April comp sales are planned up 4 to 7 percent, as seasonal warmer temperatures usually encourage sales.”
Tashjian noted that both national and regional discounters posted solid results, benefiting from the low unemployment rates and a residual effect of the minimum wage hike last October.
Edelman added that discounters also benefited from solid sales of seasonal hardgoods.
In addition, Peter Schaeffer, analyst at Dillon Read, said that discounters and off-price chains may also have benefited from a higher number of lower-income customers more willing to dress for holidays, while more affluent consumers are “getting more casual.”
Strong performers in March included Target, with a same-store sales gain of 13.1 percent, Wal-Mart Stores, up 8.5 percent, and Kmart’s general merchandise sales, which grew 12.7 percent.
TJX Cos. rose 5 percent, Ross Stores gained 10 percent, Dollar General was up 4.5 percent, and Family Bargain, 4.8 percent. Kohl’s gained 11.5 percent.
Meanwhile, major apparel specialty chains struggled. The Limited posted a 6 percent decline, dragged down by Express. Kernkraut said dresses and skirts at Express were weak. He added that management is working on the problems at Express, but he doesn’t expect a quick fix. Earlier this year, Michael Weiss, Limited’s star merchant, was reassigned from corporate vice chairman, to ceo at Express. Limited Stores logged a 3 percent decline. Lerner New York was off 7 percent, and Lane Bryant dropped 8 percent.
Gap Inc. same-store sales declined 3 percent. Edelman noted that the company is still plagued by fashion misses at the Gap stores, where comps slumped 12 percent. However, this was offset by a 12 percent gain at Old Navy. Gap Kids logged a 2 to 3 percent dip in same-store sales, while Banana Republic reported a 4 percent rise.
Carson Pirie Scott same-store sales gained 7 percent, “Our strongest categories were women’s sportswear, better men’s collections, shoes and fine jewelry,” Stanton J. Bluestone, chairman, said in a statement.
Bon-Ton Stores’ same-store sales increased 2.6 percent. “Sales in the ladies sportswear complex, shoes, home and men’s posted increases above the company average for the month,” Michael J. Gleim, president, said in a statement.
Dayton Hudson total same-store sales increased 1.9 percent, as Target’s big gain was offset by flat comps at Mervyn’s and a 4.7 percent drop at department stores.
“Based on the strength of earnings at Target, we now expect to exceed analysts’ current estimates of 33 cents a share for the first quarter,” Bob Ulrich, chairman, said.
Target’s ready-to-wear was strong, while at Mervyn’s, women’s casual and sportswear, accessories and intimate apparel performed well. At the department stores, bridge sportswear outperformed other areas.
Gottschalks’ comps were up 5.4 percent. “We experienced an extremely strong performance from our women’s sportswear and children’s divisions,” Joe Levy, chairman noted.
Proffitt’s total same-store sales were up 2 percent, excluding Parisian. By division, Younkers’ comps were up 4 percent; Proffitt’s, 5 percent, and McRae’s, 1 percent, but there was a 14 percent decline at Parisian and a 3 percent drop at Herberger’s.
Intimate Brands’ same-store sales rose 4 percent. The company also said that it completed the sale of Penhaligon’s, its U.K. subsidiary. Bath & Body Works reported a 2 percent gain in same-store sales, while Victoria’s Secret grew 5 percent.
Talbots’ comps inched ahead 1 percent, with catalog sales softer than anticipated due to a new presentation.