The nation's major retailers on Thursday reported improved sales for August, led by a round of back-to-school buying in the week before Labor Day.
The increases come after months of sluggish sales and suggest a long-awaited turnaround in consumer spending, according to some analysts. The August sales increases ranged from a 4.3% sales gain for Sears, Roebuck & Co. to a 40% jump in August sales for Wal-Mart Stores.
Overall, department and discount store sales rose 6.7% in August, compared to a year ago, and sales were up 3.2% from July, said Edward Johnson, director of the Johnson Redbook Service in New York.
"It's a nice indication that consumers aren't going to sleep," said Johnson, who expects moderate sales increases for the rest of the year. Some analysts cautioned, however, that record high levels of consumer debt and an expected boost in auto sales later this year could combine to slow the pace of retail sales during the last four months of the year.
Sarah A. Stack, an analyst with the Los Angeles investment firm of Bateman Eichler, Hill Richards, said that overall, "the sales gains are just moderate."
Retailers said they were encouraged by a surge in back-to-school buying during the last week of August, and several chains said results exceeded expectations. "Back-to-school merchandise is selling well," said Bernard M. Fauber, chairman of K mart, which reported a 7.4% year-to-year gain. "We expect fall sales to continue strong."
The back-to-school season, which normally runs from mid-August to mid-September, is viewed as a barometer for fall and winter sales.
James Newton, president of the Economic Perspectives market research firm in Delaware, Ohio, said back-to-school sales are important because if consumers don't want to buy new merchandise then, "there's no reason why they'll want it at Christmas."
Several retailers, including J. C. Penney and Sears, said August sales were also helped by sales gains in home furnishings. Analysts have expected home furnishing sales to pick up as a result of the increase in home sales that has resulted from lower interest rates.
Carter Hawley Hale Stores, the Los Angeles-based parent of the Broadway, Neiman-Marcus and Bergdorf Goodman, said August sales rose 5.8%. Philip M. Hawley, chairman and chief executive, said August sales showed strength during the last 10 days "as customers began serious buying for fall." Hawley said sales exceeded expectations in young men's clothing and women's ready-to-wear and sportswear apparel.
But analysts said it was too soon to say whether consumer spending would pick up in the fourth quarter. Monroe Greenstein, a retail analyst with Bear, Stearns & Co., a New York investment banking firm, said the new low-interest auto loans offered by domestic car makers mean that new car sales would "compete with retail sales."
Stack, the Bateman Eichler analyst, said consumers were likely to try to reduce personal debt, which now accounts for 16% of disposable income. As a result, Stack said she expected moderate Christmas sales, with retailers discounting some merchandise. But she said the discounting won't be as rampant as it has been during the last two years, when overbuying by retailers led to drastic markdowns. "This year, most retailers have their inventories under control."
Major Retailers' Sales in August
In millions Year % of dollars 1986 ago change Sears 2,285 2,192 +4.3 K mart 1,759 1,638 +7.4 J.C. Penney 1,053 998 +5.5 Federated* 792 744 +6.5 Dayton Hudson 742 661 +12.3 Wal-Mart Stores 1,030 735 +40 Woolworth 540 496 +9.0 Montgomery Ward 341 321 +6.1 May Dept. Stores 435 367 +18.3 Assoc. Dry Goods 324 307 +5.6 Carter Hawley Hale 283 267 +5.8
*Excludes supermarket sales. Excludes foreign sales.