Retail Sales Up in October - Gap Recovers a Bit; Amazon Adds Clothing to Wares

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By Dina ElBoghdady Washington Post Staff Writer Friday, November 8, 2002; Page E04

Major retailers yesterday announced gains in October sales, the first indication in months that the holiday spending season may not be a washout.

Overall, the numbers were surprisingly strong, given the down-in-the-dumps sales climate since the summer.

Gap Inc., which has been struggling for 21/2 years, posted its first monthly sales gain since mid-2000 at stores open more than a year. Same-store sales figures exclude new or closed stores and are used to measure a retailer's health.

"Things can swing so rapidly in this industry," said Michael P. Niemira, a New York-based analyst with Bank of Tokyo-Mitsubishi Ltd. "Now there are some signs that things may be getting better."

Against that backdrop, Amazon.com launched an online store yesterday that sells 400 brands of clothes, shoes and accessories.

The industry has been looking for signs of consumer life since July, when the shaky economy seemed to push shoppers from stores. Retailers hoped that September sales would be strong, especially compared with September 2001 sales, when spending fell after the terrorist attacks. But, if anything, they were worse.

Consumers kept retrenching well into October, causing many retailers to predict dire consequences for the critical stretch from Thanksgiving to Christmas.

Instead, October came through for many retailers. Same-store sales were up 3.1 percent, the strongest year-to-year gain since June, the Bank of Tokyo-Mitsubishi reported yesterday, based on reports from 80 major chains.

Among the strong performers was Kohl's Corp., with an 18.3 percent increase in same-store sales. Because of the gain, Kohl's boosted its third-quarter earnings forecast.

Wal-Mart Stores Inc. had earlier lowered its same-store forecast for October, predicting a 2 to 4 percent gain and citing poor Halloween candy sales. Yesterday, the world's largest retailer hit the higher end of that target with a 3.7 percent gain even though sales at its Sam's Club unit were down 1.6 percent.

Even the department-store sector, which has lost customers to discounters and specialty shops in the past decade, had some good performers.

Same-store sales at J.C. Penney Co. were up 13.7 percent. Earlier this week, Nordstrom Inc. posted a 9.6 percent monthly sales increase.

One factor analysts cited for the October rebound was cold weather. It started people shopping for warm clothes toward the end of the month.

Donald I. Trott, an analyst with Jefferies & Co., said sales were strongest in the East and Midwest and weakest in the West.

Many analysts also said October looked good because October 2001 was so bad, with the economy suffering the after-effects of Sept. 11.

Both factors figured in Gap's strong showing last month.

Gap's U.S. same-store sales were up 1 percent from October 2001, when sales fell 17 percent. Old Navy, Gap's sister chain, posted a 24 percent increase, compared with an 18 percent decrease last year.

"It's a partial rebound from very depressed numbers," Trott said.

In the past two years, the company's sales suffered as cheaper copycats lured away customers. In reaction, Gap veered into teenager-oriented apparel that turned off older customers.

Meanwhile, the Gap chain kept expanding, cannibalizing its own sales. Add the soft economy and by last holiday season, Gap was discounting heavily to move merchandise.

This year, the company's inventory is leaner and its merchandise is moving back to the classic looks for which the chain is known, Trott said.

Gap is one of more than 400 retailers to join Amazon.com's new clothing store. Other partners include Target Corp., Nordstrom, Eddie Bauer, Footlocker and Lands' End.

William Bass, Lands' End senior vice president of e-commerce, said nearly all of his company's merchandise will be available on the Amazon site. Amazon will handle the transactions, and Lands' End will fill and ship the orders.

Some analysts say the Amazon site may keep customers away from the stores.

"But I don't care," Bass said. "As long as someone buys Lands' End product, I don't care where they buy it from. We are truly channel-agnostic."

During a test run last week, Amazon said, its apparel store sold nearly 14,500 shirts, about 9,400 pairs of pants and more than 3,000 pairs of shoes.

-- Anonymous, November 08, 2002


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