RIGHTING RETAIL’S SHIP: REGAINING BALANCE IN WAKE OF SEPT. SLIP
Byline: Evan Clark / Jennifer Weitzman
NEW YORK — Retail sales corrected themselves in the waning days of September, but many top players, including fast-growing Chico’s FAS, remained in negative territory as last month’s attacks and additional downgrades continued to haunt the beleaguered sector.
The financial markets stabilized further Monday as the Dow Jones Industrial Average was off only 10.73 points at day’s end, to close at 8,836.83. The Nasdaq Composite Index slipped 18.34 points, to close at 1,480.46.
Department stores and mass merchants rose, for the most part, with Dillard’s up 38 cents, to $13.55; Federated up 47 cents, to $28.67; J.C. Penney Co. ahead $1.10, or 5 percent, to $23; and Wal-Mart higher by 26 cents, to $49.76.
Among the specialty retailers Chico’s, jumped $2.13, or 9 percent, to $25.68; The Limited slipped 8 cents, to $9.42; Intimate Brands fell 11 cents, to $8.89; and Delia’s slid 31 cents, to $5.03.
Chico’s has seen significant improvement in its same-store sales trends since the terrorist attacks. For the week ended Sept. 22, same-store sales were down about 11 percent, while comps last week improved dramatically, up about 6 percent.
Prior to Sept. 11 Chico’s experienced comp gains of 17 percent that average out with the weeks following the attacks to a decrease of about 3 percent as of Sept. 30. One more week remains in the month on the fiscal calendar.
Marvin Gralnick, Chico’s chief executive officer, said in a statement: “Last week, same-store sales benefited partially, due to quick reactions and implementation of a special promotion for our Passport customers [doubling their discount through Columbus Day]. We believe sales will continue to improve as we move further from Sept. 11th. We are on track with our store opening plans for this year. We are lowering our selling, general and administrative expenses to insure profitability through these challenging times.”
Jennifer Black with Wells Fargo Van Kasper noted: “Traffic and sales results should be driven by Passport members’ opportunity to receive double their normal discount on all purchases made through Columbus Day and the launch of Chico’s television advertisements.”
Federated said overall sales last week inched closer to plan, but were still off by 7 to 9 percent. While revenues improved later in the week, the Cincinnati-based firm noted: “Sales at our Manhattan stores, Macy’s Herald Square and Bloomingdale’s 59th Street, improved somewhat but are still running below the company average.” Forecasts for September still show a 15 to 20 percent sales drop.
Revenues for Penney’s department stores were “tracking significantly above plan toward a high-single-digit comparable-store sales gain,” according to a statement. The Plano, Tex.-based firm’s plan for the month was a comp increase at the high end of low-single digits.
While results were “very strong” in all merchandise categories and were generated by a planned marketing event and promotions, standout areas included women’s and men’s apparel as well as children’s.
Wal-Mart’s sales were “slightly below plan,” but the firm noted that wouldn’t prevent the discounter from meeting original estimates of a 4 to 6 percent comp increase.
Overall Shari Schwartzman Eberts, analyst at J.P. Morgan Securities, said September sales were tracking toward her expectations. “Clearly things were going to improve at department stores after the week of the terrorist attacks and they have,” she noted. “It’s a question of discretionary versus nondiscretionary — consumers still need to buy food and shampoo and everyday items, but what they don’t need to do is to run out and replenish their wardrobe.
The drain on consumer confidence after Sept. 11 also has aggravated existing difficulties at Dillard’s, which had its debt outlook reduced to “negative” by Moody’s Investor Service Monday.