The nation`s largest retailers Thursday reported significantly improved sales for January, but cautioned that the increases were due to widespread promotions that cut heavily into profit margins.
Many chains reported double-digit increases over sales reported a year earlier. But the sales are measured against January 1991, when consumers were riveted in front of their TV sets watching the Persian Gulf war.
”We`re seeing a couple of things,” said Robert Ewing, retail analyst for Fidelity Investment Cos. ”The consumer is venturing back and a lot of product was on sale.”
That view was heard as well from retailers.
”Although January sales were better than expected. . .sales volume continues to be promotionally and clearance driven,” said Stephen E. Watson, president of Dayton Hudson Corp., parent of Chicago-based Marshall Field & Co. ”As we said last month, margin erosion will have a substantial impact on earnings, for the quarter and the year.”
Dayton Hudson reported January sales rose 15.5 percent, to $1.14 billion from $987 million a year earlier. Comparable- or same-store sales, the figure representing sales at stores open for more than a year, were up 8.2 percent.
Dayton Hudson`s increases were recorded in its discount Target division and its moderately priced Mervyn`s division. Sales in its department store division, of which Field`s is a part, were flat, while comparable-store sales in the division were down 1 percent.
January sales at Chicago-based Sears, Roebuck and Co.`s Merchandise Group were up 8.6 percent, while comparable-store sales rose 7.7 percent. The increase was led by the group`s domestic retail stores, where sales were up 15.1 percent, but weak catalog and direct marketing revenues dragged down the overall performance.
Edward A. Brennan, chairman and chief executive officer, said that retail store sales for the period continued a trend that began Dec. 23.
”We are pleased with the double-digit sales increases in all seven of our merchandise businesses,” he said. Gross revenues totaled $2.79 billion, up from $2.57 billion in January 1991.
One major apparel manufacturer said the increased sales are translating into higher orders in his business.
”I would have to say that we have found that orders are up as stores have been replacing inventory,” said L.R. Pugh, chairman, president and chief executive officer of VF Corp. ”The increased orders are pretty much across the board.”
VF, based in Wyomissing, Pa., is a major apparel manufacturer. Among its divisions are Vanity Fair Mills, Wrangler, Lee Apparel, Jantzen and Jansport. Generally, discounters such as Wal-Mart Stores Inc. and Kmart Corp. turned in the strongest performances as budget-conscious consumers turned to lower-priced stores.
Some specialty stores-in particular San Francisco-based Gap Inc.-also thrived by offering what were regarded as moderate prices and good merchandise selection.
Wal-Mart, which last year surpassed Sears as the nation`s No. 1 retailer, moved ahead strongly with $43.89 billion in sales for the fiscal year. Kmart, the No. 2 retailer, said its sales for the year rose to $34.58 billion. Sears, which had been No. 1 until last year, said its sales for the fiscal year totaled $33.7 billion.
Kmart said its January same-store sales rose 6.2 percent, while overall business was up 10.3 percent. J.C. Penney Co. said its same-store sales rose 6 percent and overall sales increased 6.5 percent.
May Department Stores reported a January same-store sales gain of 8.7 percent.
