3rd UPDATE: Retailers Beat Estimates On Feb Same-Store Sales
March 04 2010 - 12:38PM
Dow Jones News
The economy appears to be thawing for retailers as one of the
worst Februarys weather-wise didn't keep shoppers from stores and
allowed the best sales growth at stores open more than a year since
November 2007, a month before the recession officially began.
Helping results was easy year-ago comparisons; nonetheless, the
sixth straight month of rising same-store sales suggests consumers
are increasingly willing to buy. Sales in February increased across
all segments but drug stores, a trend that could continue in March
because of the shift in Easter and continued light year-ago
comparisons.
"Bottom line, we are seeing a rebound in spending which is real
and encouraging," Jefferies analyst Randal Konik said. Many
companies also reported an increase in shopper traffic.
Overall, same-store sales rose 4% in February, the best
Februrary performance since 2005, and more than a third higher than
the 2.9% that analysts had predicted, Thomson Reuters said. More
than three out of every four retailers surpassed estimates as many
successfully kept Christmas inventories low, cleared items without
too much markdown and moved spring merchandise in.
"It's really looking good," said Erin Armendiger, managing
director of the Baker Retailing Initiative at the Wharton School.
"Retailers like to blame the weather, but this time it really did
temper operations."
Sales at Macy's Inc. (M) rose 3.7%, ahead of a 1.6% projection.
Terry Lundgren, chief executive officer of Macy's, said that
without "a series of winter storms that affected store operations
in some of our largest markets during key selling periods of the
month," February same-store sales would have been up by about
5%.
Consumers especially hit the mall. In addition to Macy's,
Dillard's Inc. (DDS) and Aeropostale Inc. (ARO) beat projections.
Higher-end teen retailer Abercrombie & Fitch Co. (ANF), which
has been loath to discount but has taken some steps in that
direction, posted its second consecutive same-store sales gain, at
5%, after 20 monthly consecutive declines.
Gap Inc. (GPS) posted comparable-store sales of 3%, ahead of
Wall Street's projection, and showed strength at its high- and
low-end stores as North American same-store sales rose 6% at Banana
Republic and 5% at Old Navy.
Employees at Old Navy on Thursday morning were placing $5 and
less banners for family spring wear, hoping the combination of
pent-up demand and very low prices will prove a draw for
summer.
More important for retailers' first-quarter results, observers
said, will be how March shapes up because it is a longer month and
will include more spending related to Easter this year. Easter
falls 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 came 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%.
Overall, same-store sales rose 5.8% at discount stores, 3.3% at
department stores, 6.8% at apparel stores and 5% at teen apparel
stores, according to Thomson Reuters, noting that all surpassed
Wall Street estimates. Same-store sales at drug stores slipped
0.7%, wider than the 0.2% that was expected.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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