Snow, sleet and freezing rain didn't keep shoppers from their
appointed rounds in January, as retailers reported generally good
sales for the month and showed a momentum that could bode well for
spring sales.
While many retailers said brutal weather in many parts of the
country did shave their sales, a number lifted guidance for the
segment's fourth quarter, which closed at the end of the month.
One plus was the way inventory was managed, with retailers
ordering lighter for this holiday season than the last couple of
years and not having to resort to major markdowns as they closed
out the quarter. Those that did a lot of discounting were able to
clear merchandise and move in spring wear that, with hopes of
warmer weather ahead, may be able to be sold at fuller prices,
given consumers' apparent propensity to continue buying.
The 28 retailers tracked by Thomson Reuters posted same-store
sales gains of 4.2% on average for January, compared with analysts'
projections for a 2.7% gain. The figure compares with 3.3% a year
ago and follows December's 3.1% gain and the 5.6% growth in
November
"Weather, which had been the big scare factor, had less impact
than many feared," said Edward Yruma, retail analyst at KeyBanc
Capital Markets. "Retailers were able to clear out winter
merchandise and this leaves them well positioned for spring."
Some retailers, while also missing analysts' expectations for
January sales, raised their earnings guidance for the fourth
quarter, which runs November through January, reflecting the
strength they saw over the holiday season.
J.C. Penney Co. (JCP) lifted its expectations despite falling
short of analysts' expectations--showing a drop in January
same-store sales, or sales at stores open at least a year, when a
gain was expected. The retailer said that last month was hurt by
the adverse weather and lower levels of inventory. While same-store
sales fell 1.2%, when analysts expected a 1.8% rise, the retailer
still upped its guidance for the fourth quarter, citing
better-than-expected sales for the three-month period.
Macy's Inc. (M) reported higher-than-projected same-store sales
in January, despite the harsh weather. "Sales were restrained by
the series of snowstorms that caused widespread store closings
along the East Coast and in the Southeast," said Terry J. Lundgren,
the company's chief executive.
Fellow department store Kohl's Corp. (KSS) reported a 1.4%
increase in comparable-store sales for last month, which was good
enough to prompt the retailer to lift guidance despite missing
analysts' projections for a 2.4% gain.
Discounter Target Corp. (TGT), said its same-story sales were
below expectations, particularly in portions of the South and the
Northeast and that it still expects the economic environment "to
remain challenging."
BJ's Wholesale Club Inc. (BJ), which has a big concentration of
its warehouse clubs in hard-hit winter areas, posted a 0.3% gain in
same-store sales, below expectations for 0.8%, and said "severe
snowstorms" affecting the Northeast and mid-Atlantic regions hurt
comparable-club sales by about 2.5%. The company also announced
plans to "explore strategic alternatives," which generally means a
sale or a restructuring. Word broke last month that private-equity
firm Leonard Green & Partners LP is considering a hostile
takeover bid for the warehouse club operator.
Limited Inc. (LTD), which has been doing well for the entire
quarter, which closes at the end of this month, raised its guidance
for the period after posting a 24% jump in same-store sales for
January. Analysts were expecting a 6.7% increase from the operator
of Victoria's Secret and Bath & Body Works.
One higher-end retailer showed a little slowdown as Saks Inc.
(SKS) reported a 4.4% rise in comparable-store sales when a 5.3%
gain was expected. Nordstrom Inc. (JWN) reported a 4.8% gain when
2.8% was projected.
There were periods in January that were less stormy and shoppers
could have used the time to make up for sales that were curtailed
on traditionally heavy shopping days Dec. 26 and 27, when massive
snowstorms hit parts of the country. Roughly $1 billion of retail
sales were postponed on those days, ShopperTrak estimated.
The story was once again mixed with teen retailers.
Wet Seal Inc. (WTSLA) posted a 6.2% rise in comparable-store
sales when a 4% decline was expected, and bumped up its
fourth-quarter guidance. Hot Topic Inc. (HOTT) posted a 3.3% drop
in same-store sales, when a 2.8% decline was expected, and
estimated that inclement conditions hurt results by two percentage
points.
Abercrombie & Fitch Co. (ANF), Aeropostale Inc. (ARO) and
American Eagle Outfitters Inc. (AEO) will stop reporting monthly
sales data after Thursday. The companies have declined to comment
on their decisions. However, industry watchers say the decision is
based, in part, on a desire to remove some volatility from
retailers' share prices caused by investors reacting to data from a
very limited time period. Wal-Mart Stores Inc. (WMT) stopped the
practice in May 2009, and it was expected that other retailers
would gradually follow suit.
Abercrombie, which has been gaining market share since lowering
its prices, reported a worse-than-expected 4% same-store sales
decline. The company saw particular weakness at Abercrombie kids,
where same-store sales dropped 11%. In 2009, Abercrombie held a big
gift card promotion in November and December, with redemptions in
January and did not repeat the program for the just-passed season,
which may have impacted sales.
Aeropostale and American Eagle both posted better-than-expected
same-store sales results, with Aeropostale reporting a surprise 1%
gain and raising its fourth-quarter earnings guidance. American
Eagle saw a 6% decline when analysts had expected an 8.3% drop, and
the company said it now expects its fourth-quarter earnings to be
at the high end of its prior view.
The same-store sales results have pulled retail stocks out of
their funk, with the Standard & Poor's retail index up
1.2%.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
--Catlin Nish contributed to this article.
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