UPDATE: Retailers See Sales Strength Continue In February

Shoppers had spring in their step during February, with retail sales for the month showing solid spending.

Fuller priced warmer weather wear and the remnants of winter clearance merchandise both moved well, according to early indications. February is the first month of the first quarter for most retailers and the period's smallest in terms of sales. But the month is significant because it gives retailers a bead on just what kind of demand--and price acceptance--there is for their new spring and summer merchandise.

Macy's Inc. (M) turned a very strong performance as the retailer continued its strategy of tailoring merchandise to local tastes. Sales were strong at namesake stores and the company's high-end Bloomindale's, with "Consumer reaction to new spring merchandise encouraging," Chief Executive Terry Lundgren said.

Fellow department store Kohl's Corp. (KSS) posted a 5% rise in same-store sales, beating expectations for 4.1%, while J.C. Penney Co.'s (JCP) 6.4% growth compared with expectations for 4.2%, with both companies saying all divisions posted growth.

High-end department stores continued to outperform, with especially strong sales that beat expectations by wide margins. Saks Inc. (SKS) reported a 15% jump in same-store sales when 4.9% was expected. Nordstrom Inc. (JWN) posted a 7.3% rise in comparable-store sales, handily beating projections for 4.2% growth.

While the February results are impressive for the most part, "They are not a firm confirmation retailers will have a good spring and full year," said Arnold Aronson, managing director at retail consulting firm Kurt Salmon. "We're still dealing with chronic issues like high unemployment, high gas pump prices and longer-term the higher prices that will be passed on to consumers because of rising costs for cotton and other raw materials."

The 25 retailers that issue same-store sales are expected to show a 3.6% gain from a year ago, according to analysts polled by Thomson Reuters. The size of the anticipated growth indicates true demand, and not just bargain hunting, said Jharonne Martis, retail analyst at Thomson Reuters. For one thing, the 3.6% is on top of strong 4% growth a year ago, making this the toughest comparison for retailers in five years.

The group of retail reporters that report is winnowed this month by three. Abercrombie & Fitch Co. (ANF), Aeropostale Inc. (ARO) and American Eagle Outfitters Inc. (AEO) stopped reporting results as of January.

February same-store sales results did include some major companies that missed analysts' projections. Target Corp. (TGT) posted a 1.8% rise in comparable-store sales when analysts were looking for 2.2% growth. The discounter said the showing met its own expectations, with its additions of fresh foods to stores and 5% discount for purchases on its credit and debit cards driving "meaningful incremental sales and traffic in stores."

Gap Inc. (GPS), which installed a new North American brand chief in February, missed expectations, posting a 3% decline when a 0.9% drop decline was expected.

Teen retailer Zumiez Inc. (ZUMZ) continued the very strong performance it has been seeing in recent months. Just as important, the company saw gains in customer traffic, growth in just about all categories and its smallest average price decrease "in quite some time," said Jennifer Black, president of Jennifer Black & Associates. Fellow teen retailer Hot Topic Inc. (HOTT), which has been struggling, had a promising month, posting a smaller-than-expected drop in same-store sales.

Limited Brands Inc. (LTD) turned in another in a string of strong performances, as its Victoria's Secret stores posted a 15% jump in same-store sales, benefiting from Valentine's Day, while the company's Bed Bath & Body Works stores saw 10% growth. Collectively, Limited's various units posted a 12% rise when 8.5% growth was expected.

To Jeff Edelman, director of retail services at consulting firm RSM McGladrey, despite continued, and coming, headwinds, "Consumers are moving more toward purchasing items they want, in addition to those they need. We're finally coming out of the storm, both literally and figuratively, with the economy improving and the winter's severe weather over."

Stage Stores Inc. (SSI) said it was a weather victim, hurt by particularly severe conditions in the states--Texas, Oklahoma, Arkansas and Missouri--where half of its stores are. The regional department store reported a 7.2% drop in comparable-store sales when a 2.5% rise was expected. A 10% jump in the second half of the month was not enough to offset the earlier impacts, but did put things on the right course, Chief Executive Andy Hall said.

Hall was not alone. Many retailers said that the second half of the month was woefully better than the first. Zumiez, for instance, said its same store sales burst in the last week of the month, with same-store sales leaping 24% in the last week of February.

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

--Caitlin Nish contributed to this article

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