U.S. retailers reported another month of lower same-store sales
in January, though the declines in general weren't as bad as
feared, as Wal-Mart Stores Inc. (WMT) rebounded from a weak
December with results above expectations.
Sales for stores open a year or more in January dropped 1.8%,
compared with analysts' expectations for a 2.3% decline.
The drop was the second biggest behind November's 2.1% decline,
according to Thomson Reuters, which began gathering data at the
beginning of this decade.
But trouble spots remained at some consistent underperformers of
late. Target Corp. (TGT) said its fiscal fourth-quarter earnings
won't meet analysts' expectations because of markdowns and
account-receivables woes. Gap Inc. (GPS) reported a 23% sales
slump, led by a 34% plunge at its long-ailing Old Navy chain.
Wal-Mart until December had been showing that it was benefiting
from the slumping sales seen by other retailers as consumers trade
down and do more bargain shopping.
But in January Wal-Mart's U.S. same-store-sales growth,
excluding gasoline, rose to 2.1% with the namesake chain posting a
2.1% increase and Sam's Club seeing 2.4% growth. The results edged
the high end of Wal-Mart's forecast last month of flat to 2% growth
for January.
The increase, while not terribly big, is much better than how
the retail sector as a whole has been faring.
While saying its stores "are performing very well," Wal-Mart
Vice Chairman Eduardo Castro-Wright noted the just-concluded fiscal
year's same-store-sales growth was triple that of the prior
year.
Wal-Mart also switched from providing monthly sales forecasts to
quarterly ones. For the period started Saturday, the company
anticipates U.S. same-store-sales growth of 1% to 3%.
Wal-Mart, during a conference call that accompanied its January
same-store sales release, said changing to quarterly sales
projections "is a more appropriate measure for the investment
community, especially when consumer swings are more difficult to
predict. And it is more consistent with the long-term view we take
on our business."
The decision by the world's biggest retailer drew mixed
responses.
The move is "disappointing" because it "limits visibility into
operations" at a time when investors are especially eager for
insights about what's going on in the retail industry, said Joseph
Agnese, retail analyst at Standard & Poor's Equity
Research.
Brian Sozzi, equity analyst at Wall Street Strategies, said in a
research note that Wal-Mart's decision was the right one, "despite
the thirst for increased transparency."
The retail backdrop "is incredibly volatile, and any blip on the
comp[arable sales] line may cause management teams to focus on the
near-term rather than adopting strategies to emerge successfully
from the recession," Sozzi said.
Wal-Mart wasn't alone Thursday in changing its flow of
information.
Struggling apparel retailers Chico's FAS Inc. (CHS) and Pacific
Sunwear of California Inc. (PSUN) said they will no longer report
monthly sales results.
Pacific Sunwear also said it will only provide earnings guidance
on a quarter-by-quarter basis "in light of the unprecedented and
uncertain nature of the current economic and consumer
environment."
Pacific Sunwear posted an 11% drop in January comparable-store
sales, when a 14.2% decline was expected. Chico's reported a 14.5%
drop in same-store sales for last month, when a 13% decline was
predicted.
In recent trading, Wal-Mart shares were up $1.92, or 4.1%, to
$48.34. Pacific Sunwear was off 1 cent, or 1%, to $1.15. Chico's
was ahead 31 cents, or 9.1%, to $3.73.
Same-store sales as a whole fell for the fourth-consecutive
month in January for the 35 retailers that Thomson Reuters tracks.
Some 56% of retailers beat expectations, on a par with December's
55%; 44% missed projections, compared with 42% in December.
The retail industry's troubles reflect the continued
deterioration of consumer confidence, which has crashed to record
lows of late. That is proven not just by surveys but by the biggest
drop for consumer spending in decades, and even deep discounts that
attracted shoppers as the month began lost their effectiveness as
January progressed.
Apparel and department-store chains have been weak performers
for some time and that continued in January. Department stores in
general reported declines worse than expected, with many posting
double-digit percentage drops. Saks Inc. (SKS) posted a 23.7% drop,
the biggest percentage decline of any of the retailers tracked by
Thomson Reuters. J.C. Penney Co. (JCP) reported January same-store
sales fell 16.4%, when an 11.7% decline was projected.
On the apparel side, discounter TJX Cos. (TJX) reported a 4%
decline as it projected earnings at the high end of its lowered
view, while teen chain Aeropostale Inc. (ARO) posted a
much-bigger-than-expected 11% jump and boosted its profit view.
Struggling Limited Brands Inc. (LTD) reported a 9% drop. The
parent of Victoria's Secret and Bath & Body Works last month
projected a mid- to high-teens drop on a percentage basis for
January as it slashed its fiscal fourth-quarter earnings
forecast.
And high-flier Buckle Inc. (BKE) again remained far above its
peers, reporting a 14.7% increase which was well above analysts'
expectations for 9.3%. The teen-apparel company has posted
double-digit percentage growth in same-store sales for 18
consecutive months.
-By Karen Talley, Dow Jones Newswires; 201-938-5106;
karen.talley@dowjones.com
(Kevin Kingsbury contributed to this report.)