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Retail sales recovering
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September 25, 2001: 9:57 a.m. ET
Sales edge up since WTC attack but still trail prior period
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NEW YORK (CNNfn) - Retail sales recovered last week from the sharp drop immediately following the terrorist attacks on the World Trade Center and the Pentagon but still were below the previous week, reflecting shaky consumer sentiment, according to an industry report Tuesday.
Chain-store sales declined 0.8 percent for the week ended Sept. 22, better than the 1.4 percent decline posted the previous week, according to the report jointly published by Bank of Tokyo-Mitsubishi and UBS Warburg.
Additionally, the report revised its outlook for sales at stores open at least a year, a key retailing gauge known as same-store sales, to 1 to 1.5 percent growth year-to-year in September from previous forecasts of 1.5 to 2 percent growth.
"What you're seeing is that some retailers are getting back to normal, but the weakness seems pretty widespread among department stores. So it's still an extremely fragile environment," said Michael Niemira, a Bank of Tokyo spokesman and one of the report's authors.
The report came shortly before the Conference Board reported a sharp drop in consumer confidence for September. At 10 a.m., the board reported that confidence dropped to 97.6 for the month from 114.0 in August, making that the biggest one-month decline since October, 1990.
The decline in retail sales reflects a moderation in the "pantry-loading" effect in which consumers loaded up on staples in the days following the Sept. 11 terrorist attacks that destroyed the World Trade Center and part of the Pentagon, leaving more than 6,000 people dead or missing.
However, the decline was narrower than in the previous week as consumers pried themselves away from non-stop news coverage of the tragedy, the report said.
Department stores continued to bear the brunt of declines as consumers shied away from fashion and other big-ticket purchases in favor of basics such as food and pharmacy.
Though many retailers said sales patterns have returned to more normal levels seen before the attacks, numbers still are weak compared with a year ago since consumers have been cutting back in the face of a slackening economy marked by corporate layoffs, higher fuel prices and a volatile stock market.
The Federal Reserve has cut interest rates eight times so far this year in hopes of stimulating the economy, but the effects are not evident in retail sales figures.
Customer traffic at the nation's malls improved from the previous week, though it was the softest since April 21, the report said. Mall traffic declined for the 21st consecutive week, falling nearly 8 percent from the year-earlier period.
Separately, the latest Redbook survey showed chain-store sales fell 2.2 percent the first three weeks of September compared with August.
And UBS Warburg said it now anticipates sluggish sales to persist at least through the second quarter of 2002, longer than estimates before the terrorist attacks of an improvement by February or March.
"We believe it is likely that the sales recovery will be pushed out by a few months as we expect momentum to deteriorate in some of our indicators, particularly consumer confidence," UBS retail analyst Linda Kristiansen said.
Kristiansen, another BTM report author, said low interest and inflation rates should help moderate a downturn in home sales and wages.
She said retail stocks likely will continue to under-perform, but those that demonstrate defensive sales mixes, strong balance sheets, strong cash flow positions and limited exposure to consumer credit are likely to do well. Wal-Mart Stores Inc. (WMT: up $1.21 to $48.49, Research, Estimates) and Kohl's (KSS: up $0.62 to $48.53, Research, Estimates) are two companies Kristiansen said are likely to lead the retail sector. 
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