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fashion-features

‘CNN Effect’ Goes On As Iraq War Attracts Consumers’ Focus

Major retailers gave tepid revenue guidance for March, citing concerns over the Iraqi war, which has glued many shoppers to their TVs, and the limp economy.

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Other stores, lacking Wal-Mart’s focus on basics and its ultralarge customer base, were even less optimistic about the month.

Federated Department Stores Inc. said sales last week continued to be "soft" and that it’s now looking for a comp decline of roughly 6 to 7 percent in March. The parent of Bloomingdale’s and Macy’s was earlier in the month targeting a drop of 3 to 4 percent.

J.C. Penney Co. Inc., which just wrapped up the fifth and final week of its fiscal month, said same-store sales in its department stores last month trended below the planned flat to slightly down performance. Bright spots for the week came from family shoes and women’s accessories.

ShopKo Stores Inc., which finishes its fiscal month this week, said comps were below plan last week, but it remains on track for a high-single-digit drop for the whole month.

UBS Warburg department store analyst Linda Kristiansen noted, "We have been expecting sluggish retail sales momentum to persist through at least the back-to-school season."

Kristiansen now projects a 4 percent comp-store sales decline in department stores for March, implying a negative underlying trend of 2 to 2.5 percent, after adjusting for the Easter shift. Accordingly, the analyst modestly reduced her already-below-consensus first-quarter projections for Federated, Penney’s and May Department Stores Co.

Keeping Kristiansen’s sales projections down are a group of economic issues including: a slowdown in real income growth, reduced momentum in home sales, a slowing of mortgage refinancings and lagging consumer confidence. On the plus side, she noted, interest rates are still low.

Wall Street was not enthralled by the prospects for March. The Standard & Poor’s retail index sank 4.22 points, or 1.5 percent, to end at 272.44. However, that outperformed the broader S&P 500, which fell 15.32 points, or 1.8 percent, to 848.18.

Among the declines on the New York Stock Exchange were Wal-Mart (down 2.1 percent to $52.03), Federated (1.8 percent to $28.02) and Penney’s (1.2 percent to $19.64). Managing an increase was ShopKo, rising 3.1 percent to $11.65.

With its amorphous first-quarter warning, though, Nordstrom endured more of its investors’ ire and registered a 6.5 percent drop in its share price to $16.20. The ultimate extent of the damage should be apparent on May 19, when the firm is expected to report its earnings.
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