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Sears' Majap Sales Slip As Mass Channel Softens

9/06/2002 08:01:00 AM Eastern

New York - The mass merchant channel, which had held up better than specialty CE chains against the summer slowdown, is now reporting sluggish sales for August, raising fears that a tepid back-to-school season will augur a soft second half for retailers.

Among full-line discounters reporting an August downturn was Sears, whose total revenue fell 8.7 percent to $2 billion as same store sales slipped 11.1 percent.

While chairman/CEO Alan Lacy again pointed to traffic disruptions due to its ongoing store-remodeling program, the company reported declines in its mainstay home appliance business, which has traditionally been a key sales driver.

Analysts are attributing Sears' white goods downturn to market share gains by Lowe's and an aggressive majap buildout by The Home Depot. Indeed, Home Depot CFO Carol Tome, speaking at an investment conference, noted that the home improvement chain will add appliance departments to 258 stores by year's end in addition to the current 292, and that majap comps were up about 35 percent in the second quarter.

Observers also suggest that Sears' recent emphasis on national brands may be diminishing the drawing power of its private label Kenmore line.

Weakness in the home office category also contributed to the drop in hardlines sales, Sears said.

Also showing weakness, albeit relative to year-ago performance and projected sales growth, was Wal-Mart. Total sales in August were up 11.1 percent to $18.4 billion. But comp store gains of 3.8 percent fell short of last year's 7 percent hike and the company's own lowered expectations for 4-percent to 6-percent growth.

Meanwhile, August sales at Target stores grew 9.6 percent to $2.7 billion while comps remained essentially flat at 0.5 percent growth.

Among the warehouse clubs, Costco saw August sales climb 10 percent to $3 billion and comps climb 6 percent, while sales at Wal-Mart's Sam's Club were up 6.8 percent to $2.4 billion as comps edged up 1.1 percent.

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