2001 Appraisal: Retail Sales Department Stores and Discounters
Retail sales began a southward march in the beginning of the year and never looked back. The events of Sept. 11 only compounded the sales slump, but a few retailers—mostly No. 1 chain Wal-Mart Stores Inc. and other discounters—benefited from the nation’s tough economic times and other woes.
While other retailers fell into negative territory, Bentonville, Ark.-based Wal-Mart continued to post solid sales and comparable-store sales increases. By mid-year, the company had opened 147 U.S. stores and clubs, and it planned to open 87 more by Jan. 31, 2002. The aggressive expansion continues unabated with 50 discount stores, around 185 Supercenters and up to 55 Sam’s Clubs scheduled to open beginning Feb. 1, 2002.
The retailer did see signs of softening in October, when customer counts grew compared to average ticket prices—thereby putting pressure on gross margins. December sales year-to-date have also not kept up with plan.
Meanwhile, Cincinnati-based Federated Department Stores Inc. struggled for most of the year. The company’s sales slide began last holiday season with an uptick in January due to a five-week reporting period. The company cited cold weather and deteriorating consumer confidence as culprits behind its poor showing in March, factors that impacted sales for the balance of the year. As expected, the company took a hard hit in September following the terrorist attacks.
Federated also tweaked its business model throughout the year. In February the company announced the conversion of its Stern’s department store division into Macy’s East units. The company shuttered five of the 26 locations. In June, Federated added the state of Hawaii and U.S. territory of Guam to its retail market by acquiring the 13 department stores and seven boutiques of the Liberty House chain. Then, just five months after relaunching Bloomingdales.com and Macys.com complete with fashion tips and designer boutiques, Federated announced in November it would radically scale back the ventures. Bloomingdales.com would transition from an e-commerce site to one offering marketing services and Macy’s would reduce its offerings by eliminating ready-to-wear categories petites, larger sizes, career and swimwear while expanding bridal, home and gifts. —Nola Sarkisian-Miller
