- The Washington Times - Friday, January 5, 2001

Weak holiday sales took another toll yesterday as Sears, Roebuck & Co. announced it would close 89 stores nationwide.
Major retailers Montgomery Ward and Bradlee's already announced they would close completely after a disastrous December performance.
Sears, which said yesterday that December sales fell 1.1 percent from a year ago, announced it would close four department stores, 53 National Tire and Battery stores and 32 hardware stores.
Locally, the company will close its department store in Owings Mills, Md., two NTB shops in the District, and one hardware store in Alexandria.
"There is too much retail capacity, and that's the overriding factor," said Jeff Middleswart, a retail analyst with David Tice & Associates in Dallas. "You can see that with Montgomery Ward closing all of its stores, and now with Sears closing some of its stores. We've had this big period of easy credit, so it's been easy for people to build new stores, and that's coming to an end."
Even as retailers suffered, orders to the nation's factories climbed 1.7 percent in November, reflecting increased demand for airplanes and electronics, the Commerce Department reported yesterday.
But almost all of the nation's retailers, from Sears to Target to Tiffany & Co. to the Gap, reported lackluster December sales yesterday, disappointing investors and industry analysts and forcing the companies to reduce their earnings estimates.
"The disappointing December sales are due to the fact that there is consumer apathy caused by higher oil costs, higher gasoline costs, fear of unemployment, and in some cases because the stock market has affected some people," said Walter Loeb, a retail analyst with New York's Loeb Associates.
"We also had poor weather we had ice storms in Arkansas, snow storms in New Jersey and Philadelphia which closed stores, also bad weather in the Midwest and in the East. So just about everything affected retail and as result we've had a very poor Christmas season."
For the nation's leading retailer, Wal-Mart Stores Inc. of Bentonville, Ark., sales rose a meager 0.3 percent in December and 5 percent for the year, nowhere close to its earlier projections, the company said yesterday.
The news prompted the company to reduce earnings estimates for its fourth-quarter. Shares of Wal-Mart fell $2.25 yesterday on the New York Stock Exchange to close at $56.19.
Sales at specialty retailers like Gap Inc., AnnTaylor Stores Corp. and Tiffany & Co. also remained flat. And Limited Inc. and Intimate Brands Inc., which operates Victoria's Secret and Bath & Body Works and is 84 percent owned by Limited, made similar reports.
"The weather hurt business, the uncertainty over the presidential election hurt business, high gas prices hurt business," said Alan Rifkin, a retail analyst with Lehman Brothers in New York. "No one has been able to escape that wrath."
Retailers' poor performances prompted companies to announce last month they would lay off 39,731 workers, or 30 percent, of the total job cuts announced, according to Challenger, Gray & Christmas Inc., a Chicago-based employment firm.
The number of job cuts the largest monthly announcement since 1993 was compounded by the announced closing Dec. 28 of Montgomery Ward Inc., which will be laying off 28,000 employees when it closes its 250 stores. Bradlee's Stores, which is also closing, is firing another 9,800 workers in the Northeast when it closes its 105 stores.
"This all is going to have a major effect going forward into 2001," Mr. Loeb said. "There is a fear of unemployment not so much for every person being unemployed, but if your neighbor is out of a job, that has a negative effect."
In a surprise move Wednesday, the Federal Reserve lowered interest rates by a half percentage point because it is concerned about the slowing in the economy and consumer spending.
The Fed's announcement is good for the retail industry because it has helped investors look past the malaise that the sector is experiencing, Mr. Rifkin said.
"They are hoping that further increases of interest rates on the part of the Fed will revitalize the economy and boost spending, which would benefit the retailers," he added.
This holiday season, shoppers spent the least amount of money at department stores, making them the worst performers in the industry.
Sears saw a 2.4 percent increase in yearly sales, after falling 1.1 percent in December; JC Penney Co.'s stores fell 1.6 percent, and Saks Inc. of Birmingham, Ala., fell 0.4 percent. Federated Department Stores of Cincinnati, which operates Bloomingdale's and Macy's, rose 1.2 percent.
Kohl's Corp. of Menomonee Falls, Wis., was the only department-type store to post a significant increase in sales a jump of 14.8 percent in December.
"It's kind of up and down, with no real trend," said Mark Sellers, a retail analyst with Morningstar in Chicago. "Wal-Mart did not do well, while Kohl's did, and both are discount retailers."
"But a lot of apparel retailers, especially in the high end, were worse than the rest," he added. "Like Gap, Abercrombie, Tiffany & Co."
Sales at the Gap dropped 6 percent in December.
Toys "R" Us Inc., the toy chain based in Paramus, N.J., said U.S. sales at its stores open at least a year rose 3.5 percent in the nine-week holiday shopping season compared with a 2 percent fall in 1999, when it ran out of toys.
Unlike malls and shopping centers, on-line retail performed as expected, racking up some $10 billion in sales and more than doubling last year's revenue.
"Some 210 e-commerce companies went out of business in 2000," Mr. Rifkin said. "I have never been a big believer of e-commerce, I think the numbers need to be out into perspective, and in my estimate on-line sales represented less than 1.5 percent of overall sales. So it doesn't affect the industry so much."


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