Shoppers had a spring in their step during February, with retail
sales for the month showing solid spending.
Fuller priced warmer weather wear and the remnants of
marked-down winter clearance merchandise both moved well, said
retailers. They collectively turned in better-than-expected sales
for the month at stores open more than a year.
February is the first month of the first quarter for most
retailers and the period's weakest 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 in 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 Bloomingdale'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 issued same-store sales reported a 4.2%
gain from a year ago, according to Thomson Reuters, when analysts
expected a 3.6% rise. 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.
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 Bath & Body Works stores saw 10% growth.
Collectively, Limited's various units posted a 12% rise when 8.5%
growth 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.
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.
Several retailers said March sales would be affected by Easter
falling at the end of April this year instead of the beginning in
2010. Limited, for instance, said it sees March same-store sales
roughly flat, hurt by about three to five percentage points.
Although Limited didn't elaborate, other retailers, including
Target and Macy's, said they expected to see pre-Easter sales
pushed into April.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
--Caitlin Nish contributed to this article.
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