Retailers See September Declines

Major retailers scaled back sales forecasts Monday as consumers fretting about job losses and a disastrous stock market stayed away from stores in increasing numbers.

Wal-Mart Stores Inc. ratcheted back its September sales forecast, the third month in a row that the world’s biggest retailer has been hurt by the shaky economy and consumer insecurity.

The speed and extent of the decline in Wal-Mart’s expected sales growth--3% to 4% at stores open at least a year from estimates of 4% to 6% at the start of the month--has provided some of the strongest evidence yet that consumer spending, which has kept the anemic economy aloft, may finally be foundering.

“This is in line with our view that the consumer continues to be cautious. The West Coast dockworkers situation adds additional risk to the fall and Christmas season unless it’s resolved quickly,” said Todd Slater, an analyst with Lazard.

The Bentonville, Ark., discounter’s dim outlook was echoed by other major retailers, including department store heavyweight Federated Stores Inc., which said its sales could be flat compared with earlier expectations of 3% to 5% growth.

Target Corp., the second-largest U.S. discount chain, said sales last week at stores open at least a year were “well below” the company’s plan for all of its chains. The retailer had forecast a monthly same-store sales increase of 3% to 5% at its Target stores and slightly lower for the overall company.

September same-store sales will be slightly less than year-earlier levels as consumers curtailed spending on men’s and children’s clothing, it said.

J.C. Penney Co. also said same-store sales at its department stores in September were tracking below expectations with a decline in the low single digits on a percentage basis, compared with its previous forecast for same-store sales that were flat to up slightly.

In trading on the New York Stock Exchange, Wal-Mart shares fell $2 to $49.24, and Target shares dropped $2.39 to $29.52. J.C. Penney shares slid $1.68 to $15.92 and Federated fell $1.73 to $29.44.

“The economic downturn’s impact on consumers has been lagging and we’re finally seeing them hit home,” said Frank Badillo, a senior economist with Retail Forward. A falloff in gas prices late last year, mortgage refinancing, tax rebates and tax cuts are among the factors that helped blunt the initial effect of the downturn, he said.

Wal-Mart said its earlier sales forecast was based on “too optimistic” assumptions about the amount of business lost in the post-Sept. 11 period last year.

September was supposed to be a profitable month for retailers because last year’s attacks kept shoppers away, making for easy year-ago comparisons. Wal-Mart was one of a few retailers with strong year-ago figures to match, because consumers stocked up on necessities such as groceries and eschewed discretionary spending.

Still, Wal-Mart said its quarterly earnings would match Wall Street estimates for a jump of more than 20%, ranging from 40 to 41 cents per share for the third quarter.