February Comp Sales Surprise as Consumer Confidence Rises

New York—Surprisingly strong comparable store sales results in February are being chalked up to a warmer, drier month that spurred shopping as well as an indication that Americans are feeling more confident again.

Indeed, Consumer Confidence Index now stands at 70.8, up from a revised 61.5 in January, ahead of market analysts’ average estimate for 63. The February reading marks the highest level since February 2011 when it was 72.0.

That confidence could be seen in retailers’ results released today: of the 18 retailers tracked by Thomson Reuters, comparable store sales rose 6.4% in February, ahead of the estimated 4.8% increase, and ahead of the 4.7% increase in February 2011.

“This was a very strong month. A new life has been breathed into the retailers,” said Ken Perkins, president of Retail Metrics, a research firm. “Consumers are starting to feel much better about their overall situation.”

In its tally of 20 top retailers, the International Council of Shopping Centers (ICSC) reported today that those retailers had a 6.7% increase in their comparable store sales, the biggest gain since June 2011 when summer promotional sales pushed up sales 6.9%.

Better-than-expected increases came from across the retail spectrum: Macy’s Inc., Target, Nordstrom, Saks Inc., Limited Brands, Buckle, Ross Stores, Zumiez, TJX and Costco. Even a few retailers, who have been reporting declines, had promising Februarys: Gap Inc., Bon-Ton Stores and Stein Mart.

And among retailers that reported bestselling categories, accessories and footwear were frequently cited.

Comparable store declines were reported by Kohl’s, Cato Corp. and Wet Seal.

Warmer Weather Boosted Sales of Spring Merchandise

Reflecting upon today’s results, many retail analysts pointed to positive economic factors occurring last month—from the drop in unemployment to the Dow Jones industrial average closing above 13,000 for the first time since May 2008.

Not to mention Valentine’s Day and the three day President’s Day weekend which pulled in more shoppers than last year. According to the National Retail Federation, the average person celebrating Valentine’s Day spent $126.03, up 8.5% from last year, and the highest in the survey’s 10-year history. While severe winter weather hindered Valentine’s sales last year, sales are expected to reach $17.6 billion this year compared with $15.7 billion last year.

But Mother Nature got plenty of credit, too, especially in North America, where for the most part February was warmer than usual, lifting sales of early spring merchandise in particular.

“Warm weather could have led to a fairly stellar February,” Joel Bines, head of retail practice at AlixPartners. “All indications point to a strong Valentine’s Day and the retail world benefiting from pent-up demand.”

“It is easier to consider purchasing tanks and dresses when it is snowless and 50 degrees out,” said Howard Tubin, retail analyst at RBC Capital Markets.

Analysts point out that despite the apparent well founded optimism, there are still reasons for some caution, such as rising gasoline prices which could threaten spending particularly among low- to- middle income consumers.

While a board range of retailers reported today, a growing number of them, including Walmart, JCPenney, Dillard’s, Abercrombie & Fitch, Hot Topic and American Eagle Outfitters, no longer report monthly sales results.

Among those retailers reporting their February (the four weeks ending Feb. 25 or 26) results today were:

●Macy’s Inc. reported its February comparable store sales climbed 4.6% ahead of analysts’ average estimate for a 3.5% rise.

Total sales at its Macy’s and Bloomingdale’s stores increased 5.5% to $1.86 billion. Online sales, which include macys.com and bloomingdales.com, rose 31.3%

“We saw good consumer response to our early spring deliveries in women’s apparel, and continued strong trends in accessories, shoes, cosmetics, men’s and home, which bodes well for the months ahead,” Terry Lundgren, chairman/ceo said.

Looking ahead, the company expects comparable store sales to grown 3% to 3.5% in the combined March/April period with March results to be stronger due to Easter falling earlier in April.

●Kohl’s said comparable stores sales in February fell 0.8% verses a 5% increase in same month last year. Analysts’ average estimate expected flat sales.

Total sales rose 1.1% to $1.17 billion from $1.16 billion. Geographically, the Midwest and Northeast posted the strongest sales, while comparable store sales of accessories, men’s and children’s items all increased, the company said.

●Nordstrom Inc. more than doubled its expected comparable store sales in February.

The retailer posted a 10.2% increase, topping analysts’ average estimate for a 5.6% increase. Preliminary total revenue rose 16.2% to $704 million.

Nordstrom said the month included a shift in the timing of its shoe clearance sale boosting increases by 2 to 2.5 percentage points. However, the shift will reduce March results by 1.5 to 2 percentage points.

●Saks Inc. reported February comparable store sales increased 6.6%, beating analysts’ projected 5.5%. Total sales were up 6% to $207.9 million.

The strongest categories included women’s contemporary and WEAR NOW apparel, handbags, and men’s accessories, footwear, furnishings, and contemporary apparel.

●Bon-Ton Stores posted a 0.9% rise in its total sales with a comparable store sales increase of 0.7%, the department store’s first positive numbers since January 2011.

Best selling categories included footwear, home, furniture, women’s sportswear and cosmetics. The weakest-performing category was coats.

“We are pleased with our February sales results,” said Tony Buccina, vice chairman and president for merchandising. “We successfully moved through product and are pleased with our inventory position at the end of February.”

●Stage Stores reported its February comparable store sales rose 3.7% due to strong sales in footwear, cosmetics, junior’s, men’s petites and young men’s, home and gifts. Total sales climbed 7.1% to $101 million.

Last month Stage Stores said Rich Malong, chief merchandising officer resigned to pursue other interests. The company is searching for his replacement.

●Target said its February comparable store sales leaped 7% ahead of analysts’ average estimate for a 5.2% increase. Total net retail sales soared 8% to $5.13 billion.

“February sales were well above our expectations, due to stronger-than-expected guest traffic combined with a solid increase in transaction size,” Gregg Steinhafel, ceo, said. “We’re very pleased with the pace of our sales since the holiday season, though we continue to plan for a first-quarter comparable-store sales increase of around 4%.”

●Gap Inc. posted a 4% rise in its February comparable store sales, beating analysts’ forecast for a 1.4% decline. Total sales rose 6.5% to $874 million.

“We’re pleased we delivered positive comps across our North America businesses during February and that customers responded well to our spring product,” said Glenn Murphy, ceo.

In fact, all divisions beat comparable store sales estimates: Banana Republic was up 12%,Old Navy was up 5% and Gap North America was up1%. But internationally, comparable store sales sank 9%.

●Limited Brands, parent of Victoria’s Secret and Henri Bendel, said its February total comparable store sales rose 8%, beating the 6.2% analysts’ average estimated.

Total sales fell 2.5% to $653.9 million from $670.9 million last year due to the fact its recently sold third party sourcing business contributed $70.5 million to its February 2011 figures.

By brand, Victoria’s Secret posted a 10% increase in comparable store sales, below the 8.6% analysts expected. Comp sales were up 7% at Bath and Body Works, ahead of analysts’ estimate for a 3.5% increase. It rose 1 percent at the Columbus, Ohio-based La Senza had a 1% increase in comp sales, while analysts’ expected a 2.2% drop.

●Cato Corp. posted a 5% drop in its comparable store sales in February. Total sales were $83.9 million, a 3% increase from the $86.2 million for the same period last year.

“February sales were slightly weaker than our recent trend reflecting the continuing difficult economic environment and, to a lesser extent, the impact of tax refund delays,” says John Cato, chairman, president/ceo.

●Wet Seal Inc.’s comparable store sales fell 5.8% in February, less than the 9% drop analysts’ expected. Total revenue fell% to $46.7 million. Online sales dropped 24% as the company moved to sell fuller price merchandise online.

By division, Arden B posted a 14.3% drop in comparable store sales, while Wet Seal posted a 4.3% decline.

Susan McGalla, ceo, said: “February sales were in line with our expectations. The sales trend at Wet Seal improved sequentially from January as we built higher apparel unit inventory levels during the month, while sales performance at Arden B remained similar to recent months.

“At Arden B, we continued to experience weakness in all major categories. We will carefully manage Arden B inventories as we identify opportunities to strengthen the business. We set our initial spring merchandise in the back half of February, and we look forward to gradual improvement in sales performance,” McGalla added.

●The Buckle Inc. easily beat its February comparable store sales estimates with a 14.8% jump, ahead of a 5.8% increase analysts’ expected. Total sales rose 17.4% to $86.7 million.

Sales of women’s apparel and accessories rose 19.5%, while sales of men’s rose 14.5%. Both business got a boost from strong demand for denim, casual tops and footwear, the company said.

●Zumiez continued its recent strong showing with a 14.2% comparable store sales increase in February, on top of a 12.8% increase in February 2011. Total sales grew 23.0% to $40.2 million.

The board sport apparel and accessories retailer saw its shares rise today after the February results were released Wednesday.

●Ross Stores posted a 9% surge in its February comparable store sales. Total sales grew14% to $677 million.

“We are very pleased with our February same store sales which were well ahead of our expectations,” said Michael Balmuth, ceo.“ The month benefited from favorable weather throughout most of our markets that drove broad-based merchandise and geographic trends. While we are encouraged by our solid start to the quarter, we still have the important March/April Easter selling period ahead of us. Although we hope to do better, our forecast for same store sales to be up 1% to 2% in both March and April remains unchanged.”

●Stein Mart said its February comparable store sales edged up 0.7%. Total sales were up 0.3% to $80.7 million.

Bestselling categories included women’s accessories, home, petites and men’s furnishings. Intimate apparel, men’s sportswear and women’s casual and plus size sportswear were weaker performers. Geographically, February sales were strongest in the Midwest, Southwest, Texas and the Northeast and weakest in the Southeast and the Gulf States, the company said.

●TJX Companies, parent to T.J. Maxx, Marshalls and HomeGoods, said February total comparable store sales increased 9%, ahead of analysts’ average estimate for a 7% increase. Total revenue rose 12% to $1.6 billion.

“We believe that very favorable weather patterns during the month helped boost demand for spring apparel,” said Carol Meyrowitz, ceo. “We are particularly pleased that traffic was up at all of our divisions, driving excellent performance across the board.”

●Costco, which released its fourth quarter results on Wednesday, also reported that its February total comparable store sales increased 8% with U.S. comparable store sales up 8%. Excluding gasoline price inflation and foreign, currency exchanges, comparable store sales rose 7%.

 

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