War Bab'es

As of last week, the real war babies of World War II were not munitions makers but department stores. Wall Streeters, bypassing steels, chemicals, etc., suddenly discovered them, pushed twelve of the 23 department-store stocks listed on the New York Stock Exchange to new 1941 highs. Six big merchandisers reported profits of $4,691,000 in the first half of this year, more than three times 1940's first half.

Meanwhile housewives--especially farmers' wives--kept up a buying spree (see chart} that sent last month's retail sales to an all-time high.

Since store operating costs are relatively inflexible, net profits soar much faster than sales. For the average storekeeper, 1941 is the lushest year in a decade; for smart operators, the best ever. Some semiannual reports:

> Biggest gain in sales was reported by Interstate Department Stores, operating 39 outlets. Sales in the six months ended July rose 25% to a record $13,829,000; net profits jumped from $7,000 to $403,531.

> May Department Stores (five big stores) boosted first-half sales 17% to $57,225,000, net 42% to $2,097,000.

> National Department Stores (14 units) increased sales 15%, converted last year's $67,000 loss into a $433,000 profit.

> Associated Dry Goods (eight units) increased sales 15% to $29,684,000, converted a $45,000 loss to a $525,000 profit.

Department-store-keepers have another edge over most businessmen: they need not fret about prices. As everyone knows--including Leon Henderson--it would be virtually impossible to enforce retail price ceilings in the stores without a Gestapo (or even with one). Consumers thus far have ignored all price increases. Storekeepers' only real worry is inventories. By next spring their shelves will probably be bare of certain types of durable goods, and there will be no way to replace them.

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