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No Dramatic Improvement Is Likely in the Months Ahead, Analysts Say

November 8, 1985

NEW YORK (AP) _ Persistent sluggishness in consumer spending is dampening hopes for a big pick-up during the important Christmas selling period, when the retailers traditionally post more than half of their sales and profits.

″We are not looking for any significant improvement,″ Jeffrey Feiner, a retail analyst with the investment firm Merrill Lynch, Pierce, Fenner & Smith Inc., said Thursday after leading retailers released monthly sales reports.

Walter Loeb, an analyst with Morgan Stanley & Co. was slightly more optimistic, saying he believes consumers, who ″want to take care of their families″ during the holidays will take on more debt.

Still, Christmas sales overall will be ″fair,″ Loeb predicted.

The good news, for the companies, is that their markdowns haven’t been, and probably won’t be, as drastic as they were last year. That means their profits should be greater, analysts say.

That may mean fewer bargains for consumers, though.

General merchandise sales did accelerate somewhat in October, but they still were disappointing, the retailers said.

Sears, Roebuck & Co., the nation’s largest retailer, said its sales for the four weeks ended Nov. 2 edged up 2.4 percent from the same period a year ago. In September, it posted a 0.3 percent year-to-year gain.

K mart Corp., ranked second, said its October sales rose 4.4. percent. The retailer’s sales in the previous month increased 2.7 pecent.

No. 3 J.C. Penney Co. said its latest sales increased 1.6 percent vs. a 0.5 percent decline a month earlier.

Fourth-ranked Federated Department Stores Inc. said its October sales were up 4.9 percent and No. 5 Dayton Hudson Corp. posted an 11.7 percent boost.

″These are not big numbers but they’re better than they were in September,″ Feiner said. ″I think it’s premature to believe that this indicates any significant change in the level of consumer spending.″

Although consumers still feel confident about the economy, their already high levels of debt and low rate of savings are limiting their spending, the analysts said.

Chicago-based Sears said its October sales totaled $2.295 billion compared with $2.24 billion in the same period a year ago. The leading retailer’s sales for the year to date inched up 0.5 percent to $20.4 billion from $20.3 billion.

K mart, headquartered in Troy, Mich., said its October sales came to $1.59 billion compared with $1.53 billion a year earlier. For the past 39 weeks, sales rose 9.2 percent to $15.68 billion from $14.36 billion.

Penney, of New York, said its four-week sales came to $910 million vs. $896 million.

William Howell, Penney’s chairman, said sales were strongest in the East and Southeast, and that they gained momentum throughout the country during the latter part of the month.

For the nine months, Penney’s sales were up 0.7 percent to $8.335 billion from $8.28 billion.

Cincinnati-based Federated said its sales totaled $754.2 million vs. $718.7 million. So far this year, sales rose 6.8 percent to $6.73 billion from $6.31 billion.

Dayton Hudson, which is headquartered in Minneapolis, said its four-week sales were $636.7 million vs. $569.9 million. Nine-month sales rose 14.5 percent to $5.7 billion from $4.98 billion.

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