Retailers See Signs of Hope Despite Consumer Caution
LATE in October K mart Corporation will open a new 145,000 square-foot store in the Fresh Meadows section of Queens, on the site of an old Bloomingdale's outlet. The New York store will create more than 400 jobs.
Meantime, Bradlees Inc., a Massachusetts-based department store, plans to open six stores in the metropolitan New York area by 1994. The stores, which were operated by Alexanders Inc. before that chain's bankruptcy, will employ more than 1,000 people.
Nor is New York alone in seeing an infusion of new retail outlets. K mart is expected to open over 90 new stores between now and January 1993. Other major retailers, including Wal-Mart, Home Depot, Toys `R' Us, and Dillard Department Stores plan to expand, either by opening new stores or through acquisitions.
Although few analysts anticipate a big surge in spending by United States consumers during the rest of this year, there is a growing perception that improvement is at hand for retailers.
"Back-to-school" sales were fairly strong for a number of stores. Retailers' stock prices have gained in recent weeks, with some shares climbing 10 to 20 percent over their lows for the year. And retailers have slashed inventories, which should allow them to avoid heavy discounting during the coming Christmas holiday season. Sales - and stock prices - rise
Sales of general merchandise products in the US grew at an estimated 4-percent annual rate in the first half of 1992, according to Salomon Brothers. That should accelerate to a 5.5- to 6-percent annual rate of growth in the second half of the year, the investment house concludes. Though not spectacular, that growth is up from 1991.
Meantime, the Salomon Brothers Retail Index, designed to monitor the well-being of the industry, advanced in August to 4.2 percent from 4 percent in July. Salomon concludes that the gain means retailers met or exceeded "generally conservative expectations."
High consumer debt and the lack of growth in personal income have been major obstacles to increased consumer spending, says Janet Mangano, a retail analyst for Burnham Securities Inc.
Ms. Mangano is generally cautious about sales gains for the industry as a whole this year, although she says some major chains - Sears, Roebuck & Co., J. C. Penney, K mart, Woolworth Corporation, and May Department Stores - are well-positioned to take advantage of a slowly improving economy. Sears to restructure
Sears, which has been surpassed by Wal-Mart in recent years as the nation's largest retailer, announced a restructuring Tuesday that promises to "gradually benefit" the company, Mangano says. Long under pressure from shareholders, Sears said it would sell nonretail businesses, including its Dean Witter Financial Services Group and 20 percent of its Allstate Insurance Group. This will help pay off much of its $38 billion corporate debt.
Like many of its competitors, Sears has seen some modest sales gains lately. In August, the last month for which full figures are available, comparable-store sales rose 3.5 percent over the prior year, according to Prudential Securities Inc. That followed a decline in comparable-store sales of 2.2 percent in July.
Whether September results will be as good is yet unknown. According to the Conference Board, a business group, consumer confidence just fell again for the third month in a row.
Still, within corporate board rooms there appears to be hope that improvement is not far off. A top Bradlees official told a press conference here recently that not only was the chain excited at the prospect of coming into New York, but Bradlees was actively looking for additional sites in this area.