Indian Summer Cools Store Sales

That glorious Indian summer blew something of a hole in the nation's department-stores sales for October.

The unseasonably warm fall hurt apparel sales, which turned overall sales "for the most part slightly below plan," said Wayne Hood, an analyst at Prudential Securities. As a result, the Prudential index of 76 department stores posted an overall gain of just 1.5 percent in October sales over the year-ago period.

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Some are seeing more of a problem emerging for the department stores than this October's sunny skies. Alan Mak, an analyst at Argus Research, said the department stores have watched their sales edge lower for the past few months.

"It's not just the warm weather; it's more of an overall trend that they're having market share taken away from them," Mak said. "We didn't see a substantial slowdown from the specialty apparel [stores] and some of the discounters."

Gaining at the expense of big-name department stores like JCPenney (JCP) and Sears, Roebuck & Co. (S) were discounters like Wal-Mart (WMT), Kmart (KMT) and Dayton-Hudson's (DH) Target Stores.

Of note in the October batch of sales reports was the recovery of luxury retailer Neiman Marcus (NMG). The luxury group had been hurt badly in the market downturn in August and September. The picture changed, not coincidentally, with the stock market's upturn in October, noted analyst Sally Schaadt of Fourteen Research.

Among the stores reporting sales:

• Dillard's Inc. (DDS) said October same-store sales declined 4 percent. Overall sales rose 21 percent to $560.2 million, including sales of stores acquired from Mercantile Stores and retained. Dillard's shares declined 3/4 to 33 13/16.
• Federated Department Stores (FD) said October sales at stores open at least a year were down 1.9 percent againslast October. Total sales decreased 2.7 percent to $1.1 billion. Said Chief Executive Officer James Zimmerman: "While September and October sales will affect our ability to achieve our annual sales target, it remains to be seen whether these circumstances will carry over into the fourth quarter. We believe we have prepared very effectively for the fourth quarter and still are hopeful that the recent sales trend will change." Federated's stock rose 7/8 to 38 5/16.
• Gap Inc. (GPS) said October same-store sales climbed 18 percent over last year's and that total sales rose 40 percent to $731 million for the four-week period. Gap shares fell 1 7/8 to 62 5/16.
• Goody's Family Clothing Inc. (GDYS) reported same-store October sales declining 7.3 percent from last year's. Overall sales rose 3.3 percent to $81.8 million. As a result of the softness, the company said it expected that earnings per share for the third quarter "will be at the low end" of the 10 to 14 cents Goody's projected last month. "With the sales shortfall in the third quarter and short-term negative sales trend, inventory levels are above plan. Where possible," the company said, "we continue to reduce commitments for merchandise purchases. We remain cautious about the prospects for the fourth quarter." Shares rose 1 1/16 to 11 3/16.
• Same-store sales at JCPenney stores for the month decreased 2.8 percent; overall sales fell 4.2 percent to $1.12 billion. Its stock edged 9/16 lower to 49 1/8.
• May Department Stores (MAY) said October same-store sales rose 2.8 percent and that its preliminary sales for the four-week period show a 6.5 percent increase over last year to $932 million. Shares were down 9/16 to 60.
• The Neiman Marcus Group's October same-store sales rose 2.4 percent and that overall sales rose 6.5 percent to $217.6 million.
• Sears, Roebuck & Co. said same-store October sales declined 1.9 percent and that total domestic sales were $2.19 billion, 0.1 percent below those in the same period last year. Sears shares inched 1/8 higher to 46 15/16.
• October same-store sales at Wal-Mart Stores rose 7.7 percent, with net sales rising 13.5 percent to $10.4 billion.

Written By Emily Church