UPDATE: Retailers Beating Estimates On Feb Same-Store Sales

The recession appears to be thawing for retailers as one of the worst Februarys weather-wise did not keep shoppers from stores and allowed the best same-store sales showing in six months.

Comparable-store sales rose 4% when 2.9% was predicted for the 28 retailers that report through Thomson Reuters. The next best month was January at 3.3%, and the positive showing marks half a year of straight gains after 12 monthly declines as retailers were caught off-guard by a consumer-led recession that began in December 2007.

"It's really looking good," said Erin Armendiger, managing director of the Baker Retailing Initiavive at the Wharton School. "Retailers like to blame the weather, but this time it really did temper operations."

But while stores did close, especially in the Northeast, sales were promising nonetheless, "which suggests we would have done even better," Armendiger said.

Consumers especially hit the malls, with Macy's Inc. (M), Dillard's Inc. (DDS), Abercrombie and Fitch Co. (ANF) and Aeropostale Inc. (ARO) all beating projections.

With most retailers reporting, 82% beat expectations as they kept Christmas inventories low, were able to clear items without too much markdown and move spring merchandise in.

Gap Inc. (GPS) posted comparable-store sales of 3%, ahead of Wall Street's projection. Gap's Old Navy stores reported North American sales rose 6%. Employees at Old Navy on Thursday morning were placing $5 and less banners for family springwear, hoping the combination of pent up demand and very low prices will prove a draw for summer.

While the consumer in general appears to be spending more at stores, they are making less large ticket trips and were up against easy year-ago comparisons.

More importantly, observers said, will be how March shapes up because it is a longer month and will include this year more spending related to Easter, which falls on April 4, earlier than last year.

"A particularly soft March would not bode well for retailers already grappling with high unemployment and a weak job market," said Ken Perkins, research analyst at RetailMetrics.

Nonetheless, February proved to be a healthy month for many retailers. Surprisingly strong sales from teen retailer Zumiez Inc. (ZUMZ), which reported same-store sales growth of 11% in February, compared with Wall Street's projection of 1.2% growth and last year's 13% slide.

In contrast, fellow teen retailer Hot Topic Inc. (HOTT) reported a 7% decrease in same-store sales but still surpassed the average Street estimate for a 13% decline.

Also strong was Limited Brands Inc. (LTD), which reported a 10% increase in February same-store sales, benefiting from strong Valentine's Day-related sales at its Victoria Secret division, where same-store sales rose 10%. Limited's total sales rose to $600.1 million from $547.8 million a year ago.

On the weak side was Destination Maternity Corp. (DEST), which reported a 9.3% drop in February same-store sales, and apparel and accessory store Stage Stores Inc. (SSI), which saw same-store sales slide 3.9%.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

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