Retail Sales For February Could Show Some Stability
March 03 2009 - 3:32PM
Dow Jones News
Look for signs of improvement when retailers report February
same-store-sales on Thursday, with just about all major categories
expected to fare better than in prior months.
Sales by the 35 retailers that Thomson Reuters tracks are
expected to drop 1.2%, an improvement over January's 1.8% decline
and November's 2.1% drop. Retailers' comparable store sales fell by
0.9% in December. However, given trends over the last few months,
more retailers have beaten than missed analysts' expectations. So
February's final figure could also end up beating December's
result.
Retailers have been saying in recent fourth-quarter conference
calls that they are making headway in reducing their inventories.
But there are likely to still be margin questions because
indications are that in many cases deep discounting continued in
February.
But things are not all bad. While many of the projected
same-store sales improvements for February are incremental - and
still represent drops in year-over-year sales - there may be some
stabilization developing.
"Things generally crashed over the last few months, and now we
are seeing some signs of improvement," said Jharonne Martis, senior
research analyst at Thomson Reuters.
The stabilization may have at least a bit of longevity, Martis
said. "If the (federal) government's (economic) stimulus package is
implemented, especially the tax rebates, we could see more of an
uptick in consumer spending."
But permanency is the big question. The tax rebates given out
last year and in 2001 did help spending levels increase somewhat,
but the improvement did not last, government reports show.
Right now there are too many dire variables - including a
recession, a crumbling financial system and high unemployment - to
foster much consumer confidence, which is key to spending.
Consumers are also saving more. The U.S. savings rate climbed
from 3.9% in December to 5% in January, its highest level since
March 1995.
Of the five major retail categories that Thomson Reuters tracks,
three - department stores, apparel retailers and specialty
retailers that focus on teens - are expected to do better in
February than January.
Discounters are awfully close, projected to see comparable store
growth of 0.8% in February compared to 0.9% in January.
Wal-Mart Stores Inc. (WMT) is a standout, expected to see three
successive months of improvement, from growth of 1.7% in December
to 2.1% in January and 2.4% in February.
But Target Corp. (TGT) can't catch an uptrend, with February
same-store sales expected to drop 4.8% after a 3.3% decline in
December and a 4.1% fall in November.
Several department stores - one of the hardest-hit retail groups
- are at least expected to show some improvement, although their
sales are still down. Kohl's Corp. (KSS) is projected to see a 4.4%
drop in February after a 13.4% decline the prior month.
J.C. Penney Co. (JCP) is projected to report a 12.9% decline
after same-store sales fell 16.4% in January.
Among teen retailers, American Eagle Outfitters Inc. (AEO) and
Aeropostale Inc. (ARO) may both show the benefit of "aggressive and
innovative promotional tactics," said Chandi Neubauer, retail
analyst at Majestic Research.
Robert Samuels, retail analyst at Oppenheimer Equity Research,
said he "would not be surprised to see some names beat
expectations."
But there remains a cost in many cases. Retailers "are offering
steep discounts in order to entice customers to buy, which will
continue to hamper margins," Samuels said.
-By Karen Talley, Dow Jones Newswires; 201-938-5106;
karen.talley@dowjones.com