Major retailers' sales slow
Warmer weather helps some, but mainly came along too late

The Associated Press
July 11th, 2003


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NEW YORK -- Several major retailers, including J.C. Penney Co. and Target
Corp., shaved their second quarter earnings outlook Thursday, as they
reported slow sales growth in June, their second most important month.

The belated arrival of warm weather at the end of June helped drive sales of
air conditioners and bathing suits, but it came too late to help save
retailers already hampered by a slow economy. Unusually wet weather in some
regions, particularly the Northeast in May and early June forced heavy
discounting of slow-moving merchandise to fuel sales.

There are Target stores in Palm Desert and Cathedral City, with plans to
build another one in La Quinta.

Wal-Mart Stores Inc., the world's largest retailer, reported a small sales
gain that was a bit below analysts' forecasts. Department stores continued
to struggle, but there were some bright spots.

Last April, Wal-Mart deepened its ties in the Coachella Valley as it
unveiled plans to build a 219,600-square-foot SuperCenter in Palm Springs by
2005.

The proposed SuperCenter would employ about 500 workers, putting Wal-Mart in
a position of creating 1,350 new jobs in the valley between two other
SuperCenters and a Sam's Club already in various stages of planning and
construction in Palm Desert and La Quinta.

Wal-Mart also operates a store in Cathedral City.

Gap Inc. again impressed Wall Street with double-digit gains, besting
analysts' projections as it digs out from more than two years of
disappointments.

There are The Gap and Gap Kids stores in Palm Desert.

Neiman Marcus

Swank Neiman Marcus Group Inc. also reported double-digit increases at
stores opened at least a year, which well exceeded analysts' estimates.

Sales at stores opened at least a year, also known as same-store sales, are
considered the best indicator of a retailer's health.

"The results were modest, though we are slowly starting to see a bit more
improvement. But it is not great," said Michael P. Niemira, vice president
of Bank of Tokyo-Mitsubishi.

Bank of Tokyo-Mitsubishi Ltd.'s same-store sales tally of 78 stores was up
2.4 percent for June, slightly better than the 2 percent gain Niemira
expected. That compares to a 5.1 percent gain in the year-ago period.

Pace up slightly

The pace is above the sluggish 1.5 percent increase that had been seen from
the August through April period. Retailers reported a 2 percent gain in May,
compared with a year ago, but Niemira is hoping that June serves as a
transition for much better sales increases. He expects that same-store sales
will be up anywhere from 2.5 percent to 3.5 percent in July, when stores
begin to ship back-to-school merchandise.

June is the second most important month in a retailers' sales calendar,
behind December, accounting for 10.2 percent of annual revenues last year.
It is the last chance for retailers to get rid of spring merchandise while
also selling summer goods before making room for back-to-school merchandise.

But as Richard Jaffe, an analyst at UBS Warburg Securities, puts it,
"Inventories were inflated and demand was low."

Niemira added that "the economics that drive the industry is still kind of
sluggish."

A report released by the Labor Department on Thursday showed that more
Americans signed up for unemployment benefits last week, indicating that
businesses are maintaining lean work forces until the economy shows clear
signs of recovery.

For the work week ending July 5, new claims filed for unemployment insurance
increased by a seasonally adjusted 5,000 to 439,000, the highest level since
the week ending May 31. The increase surprised economists who were
projecting a decline in jobless claims.

Weather was clearly a factor in June retail sales results. This was the
nation's sixth coldest June since 1895 when the National Climatic Data
Center began tracking the data.

It was also the seventh wettest since 1895, with the nation having 3.5
inches of rainfall on average, above the national average of 0.6.

Wal-Mart said that the belated arrival of warm weather helped fuel sales of
apparel and air conditioners at the end of the month, but it said
inventories were still above its goals.

It noted in a pre-recorded call that inventories are growing more quickly
than the company's target of half the sales pace.

The retailer posted same-store sales for the company of 2.7 percent,
slightly below the 3 percent gain estimated by analysts polled by Thomson
First Call.

Target Corp. said same-store sales increased a meager 0.8 percent, in line
with the 0.6 percent increase forecast by Wall Street.

The department sector fared the second worst, behind footwear retailers,
according to Niemira.

At J.C. Penney Co. Inc., same-store sales were up 0.1 percent for its
department store business, which was about in line with the 0.4 decrease
analysts projected.

May Department Stores Co. reported that same-store sales were down 5.9
percent.

At Sears, Roebuck and Co., same-stores sales for its domestic stores were
down 1.8 percent.

At Federated Department Stores Inc., same-stores results slipped 2 percent.

Kohl's, a hybrid between a discounter and department store, had a 2.4
percent same-store sales decrease.

Both Kohl's Corp. and TJX Cos. trimmed profit targets.

Meanwhile, Gap, which is in the midst of a turnaround, posted a same-store
sales gain of 10 percent, above the 7.8 percent increase expected by Wall
Street.

At the Gap division, sales of capris, cropped pants and skirts were strong,
the company said.

Neiman Marcus, which operates Bergdorf Goodman and Neiman Marcus stores,
said that same-store sales were up 10.3 percent, well exceeding the 1.8
percent gain estimated by analysts.

"Dr. Convection" <Convection@convection.uk> wrote in message
news:vyYPa.420528$ro6.10113887@news2.calgary.shaw. ca...
> Major retailers' sales slow
> Warmer weather helps some, but mainly came along too late

Gee. Warmer weather. Guess you just can't count on weather to stay fixed..

It get colder. It gets warmer. It gets windier. Kind of off topic though.
You want sci.geo.meterology.