Outlook for Spring Retail Sales Dims

www.newsday.com By ANNE D'INNOCENZIO AP Business Writer

February 23, 2003, 1:52 PM EST NEW YORK -- Spring is looking like another tough sell for the nation's ailing retailers. Merchants' hopes for brighter days as spring sales get under way were dimmed by heavy snow that blanketed the Northeast during President's Day weekend, wiping out the much-anticipated sales bonanza needed to jump-start the season. Add the looming uncertainty about war with Iraq and a sluggish job market, and retailers are likely to stay in the doldrums. The latest blow came as department and mall-based apparel stores were grappling with the government's heightened terrorist alert, which made consumers even edgier and sent many on buying sprees for batteries and duct tape at such places as Home Depot Inc. and Wal-Mart Stores. "Consumers are having a hard time getting into spring, not knowing what is going to happen in March and April," said C. Britt Beemer, chairman of America's Research Group in Charleston, S.C. "It's been a yo-yo." In fact, consumers like April Mason and Andrea Tortora said such factors have made them less interested in buying spring apparel, like micro-miniskirts. "It seems too cold and snowy to think about spring clothes. I haven't walked into a department store since right after Christmas when I returned some gifts," said Mason, a 29-year-old public relations executive from New York City. And even though she feels her job is secure, she's sticking to basics because of the political uncertainties. "I won't be buying a pair of expensive sandals," she added. Tortora said she, too, has maintained "a wait-and-see attitude" when it comes to spending on frivolous items, although she did buy a dishwasher, garbage disposal and new faucets for her Cincinnati home. February is when stores clear out winter leftovers and do some regular-price selling of spring merchandise, but this month is winding up to be a wash for many retailers after a weak holiday and January period. Michael P. Niemira, vice president at Bank of Tokyo-Mitsubishi Ltd., now expects same-store sales for February to be up a modest 0.5 percent from a year ago. Same-store sales are sales at stores open at least a year, and are considered an important indicator of a retailer's health. Niemira noted that last weekend's snowstorm, the worst in the Northeast since 1996, shaved about 0.5 percentage points from the monthly sales pace. The bulk of the nation's retailers will be reporting their same-store sales on March 6. President's Day weekend is one of the most important sales days of the year. Niemira estimates that last year, the holiday weekend accounted for 13.1 percent of the total month's sales in the Northeast. And while stores like Macy's, which closed 25 of its 100 stores in its Eastern division on Monday, are repeating President Day sales this weekend, many analysts don't expect merchants to recoup lost business. "A little bit of the business will be recovered, but you never make up the business," said Richard Jaffe, an analyst at UBS Warburg Securities. "Are you going to shop twice (as much) this Saturday? You will or you won't shop." Snowstorm or not, political and economic uncertainties continue to plague retailers, as evidenced by this week's earnings reports from several major merchants. While the good news is that merchants preserved fourth-quarter profits with lean inventory and cost-cutting measures, they still face the problem of inspiring consumers to spend. Robust sales in Wal-Mart Stores' international division helped boost fourth-quarter results, beating analysts' expectations, while increased earnings from its credit card division helped Target Corp. match Wall Street estimates of modest earnings growth. J.C. Penney Co. Inc., which is in the midst of a turnaround, saw profits double in the fourth quarter, helped by strong sales of jewelry, home goods and clothing. Results beat Wall Street expectations. Still, Allen Questrom, chairman and chief executive officer, remained cautious. "As we begin the third year of a very complex turnaround, we face internal challenges and many uncertain external factors, but we believe that each of our businesses will continue to improve," Questrom said in a statement.