Report: February Comp Sales Caught a Chill

In Reports, What's New, Industry News by Jeff Prine

Not helping matters for many retailers in the Midwest and East Coast were a series of winter storms in February.

Not helping matters for many retailers in the Midwest and East Coast were a series of winter storms in February.

New York—Despite a slight upsurge expected in Valentine’s Day spending, total February comparable store sales slowed due to bad winter weather, higher taxes, more expensive gas and concern over “sequestration” in the U.S. government.

In its preliminary tally of 15 retailers, the International Council of Shopping Centers (ICSC) said comp sales rose 1.7%–a sharp slowdown from a 4.5% increase in January comp sales. ICSC said total store sales rose 2.9% compared to February 2012.

Excluding results from drugstores, ICSC said comparable store sales rose 4.2% in February, but owing to the fact that many major retailers, including Macy’s Inc., Kohl’s, Nordstrom, Target, Bon Ton Stores and Stage Stores, no longer are reporting monthly sales results, sample changes make it difficult to figure out an average comp store result. As with the total store results, February’s comp was slower than January’s 5.1% pace, but in line with 2012’s 4.4% pace.

Meanwhile, Retail Metrics, a research firm, said its results found just a 1.9% increase in February comparable store sales, below its projection for a 2.5% increase. Excluding drugstores, comparable store sales rose 4.2%.

The best performing sector was discount stores; the worst performer was teen apparel, Retail Metrics reported.

“February was a challenging month,” Barbara Kahn, director of the Baker Retailing Center at the Wharton School, told Dow Jones. “Consumers were up against mixed economic news. They faced things like the payroll tax increases, but at the same time the stock market was getting strong and housing was improving.”

In its February comparable store sales results, Thomson Reuters reported a 3.9% gain. Excluding drugstores, Thomson Reuters said the February estimate was up 3.3%.

March Sales to Get an ‘Easter Lift’?

Among the retailers whose comp sales beat forecasts were Gap Inc., Limited Brands, Stein Mart, TJX Cos. and Costco. Those reporting declines in comp store revenue included Cato, Buckle Inc., Zumiez, and Ross Stores. Hot Topic didn’t released February results today since the teen retailer announced it would be purchased and taken private by Sycamore Partners.

Economists closely monitor consumer spending since it accounts for more than 70% of the U.S. economy.

Retail Metrics projected an overall gain of 2.5% year-over-year, compared with a 5.1% gain in January and a 4.2% gain in February 2012.

However, the research firm said this morning that the overall gain reached just 1.9% in February. Excluding drug stores, comparable store sales rose 4.2%. The best performing sector was discount stores; the worst performer was teen apparel.

While some leading retailers such as Walmart, Sears Holdings, Dillard’s, JCPenney, Abercrombie & Fitch and American Eagle Outfitters had stopped reporting monthly sales in previous years, the start of fiscal 2013 saw many more retailers end the monthly reports.

Despite having a smaller pool to use to ascertain retail sales trends, analysts argue that the results are still helpful albeit more limited information.

“It’s still a relevant barometer, but it does not give you as clear a picture as it used to,” said Madison Riley, managing director at Kurt Salmon.

Looking ahead, ICSC Research forecast that March comparable store sales will rise 3% to 4% perhaps helped by an “Easter lift.” However, April sales may be weaker since Easter fell in April 2012.

Among the retailers reporting monthly sales results today were:

●Gap Inc. reported total February comparable store sales rose 3% ahead of analysts’ 2.3% estimate. Total net sales were up 11% to $966 million. The 8 percentage point difference between the comp growth and the total sales growth was driven largely by the calendar shift, as February 2013 drops off a lower volume week and picks up a higher volume week versus last year, the company said. Additionally, intermix, which Gap Inc. purchased in January, is included in total sales and does not have a last year comparison.

Global comps by retail division were: Gap Inc., positive 3% versus positive 4% last year; Gap brand Global, positive 2% versus negative 2% last year; Banana Republic Global, negative 5% versus positive 11% last year; Old Navy Global, positive 6% versus positive 5% last year.

The company noted that since Easter this year falls on March 31 versus April 8 last year, “we expected the earlier Easter timing to negatively impact March as Easter Sunday when there’s far less shopping activity falls into March versus April last year.”

●Limited Brands said its total February comparable store sales rose 3% beating analysts’ estimate for a 2.6% increase. Total sales were $712.7 million compared to $653.9 million a year ago.

The owner of Victoria’s Secret said its February merchandise margin rate was down to last year. Inventories ended the month down 1% per square foot at cost versus last year.

At Victoria’s Secret, February comp store sales increased 5% on top of a 10% rise last year, “driven by strength across the assortment. February began with a focus on Valentine’s Day. Midmonth, we transitioned our focus to both Dream Angels and PINK’s spring break essentials. At the close of the month, we launched our fabulous bra with a focus on its demi frame.”

Victoria’s Secret also reported its merchandise margin rate decreased versus last year, driven by strong response to CRM and gift with purchase offers, and increased promotional activity versus last year. Merchandise margin dollars increased versus last year.

At Victoria’s Secret Direct, February sales were down 4%, driven by a reduction in clearance selling and a decline in the clothing category. Bath & Body Works reported flat February comps. At La Senza Canada, February comps were up 5% and the merchandise margin rate was roughly flat.

Commenting on its March comp forecast, the company said it expects roughly flat comp sales due to the shift to an earlier Easter this year.

●Cato Corp. reported a smaller-than-expected 3 percent drop in comparable sales thanks to sales due to shoppers spending their tax refunds. Total sales increased 1% to $84.7 million.

“February sales reflect the continuing difficult economic environment,” said John Cato, chairman, president and chief executive. “We did see some beneficial impact from the delay in tax refunds from January.”

Buckle Inc.’s February comparable store sales declined 1.1% which was still better than a 2.7% declined that analysts’ average estimate expected. Total sales rose 2.9% to $89.3 million from $86.7 million.

Buckle Inc. will announce fourth quarter and full-year fiscal 2012 earnings on March 14.

●Zumiez Inc. posted an 8.9% decline in its February comparable store sales—even worst than the 1.3% decline analysts’ expected. However, total net sales rose 10.6% to $40.2 million.

The sports-related teen specialty retailer is expected to reports its fourth quarter earnings on March 14, but the company had earlier reported preliminary fourth quarter sales of $224.2 million, which was above its guidance range of $218 million to $221.0 million. Its earnings forecast was in the range of 65 cents to 66 cents a share while analysts’ forecast 73 cents a share.

●Ross Stores Inc. said its February same-store sales fell 1% after a 9% gain a year earlier. Analysts’ average estimate expected a 1.1% increase. Total sales rose 3% to $726 million.

“We believe the slight decline in February same store sales was mainly due to the delay in income tax refunds,” said Michael Balmuth, vice chairman/ceo. “With sales improving as the month progressed, we continue to forecast same store sales in March and April to be down 1% to 2% and up 5% to 6%, respectively.  This monthly guidance reflects the shift in the Easter holiday and is on top of last year’s robust same store sales gains of 10% in March and 7% in April.”

●Stein Mart Inc. Stein Mart said its February comparable store sales edged up 0.6% beating analysts’ estimate for flat comps. Total revenue was up 5.6% to $85.2 million.

Stein Mart reports that its strongest categories during the month were women’s casual sportswear and men’s sportswear. Among the softer categories were women’s boutique, women’s’ special sizes, dresses and accessories.

Sales were strongest in Florida and the West. Other areas such as the Midwest, Northeast and Mid-Atlantic experienced weaker results due to cold or bad weather conditions.

“I am pleased with our February sales performance, given the unfavorable impact of weather on certain regions and the change in our 12-hour event,” said Jay Stein, interim chief executive. “While sales were down early in the month due to our replacing the February 12-hour event with a much smaller promotion, they were good overall. As previously reported, fall inventory levels were planned up at year-end to better drive early first quarter selling.”

●TJX Cos., owner of T.J. Maxx, Marshalls, and HomeGoods, said its total comparable store sales were up 1% ahead of a 0.4% rise that analysts’ expected. Total net sales were up 7% to $1.8 billion.

According to Carol Meyrowitz, chief executive, “Business trends picked up at the very end of the month, leading to our February comp store sales coming in higher than expected at a 1% increase. Winter storms in many U.S. and Canadian regions kept customers at home, but we were pleased to see our momentum continue in warmer weather markets.”

●Costco Wholesale Corp. posted a 6% increase in its February comparable store sales, beating analysts’ estimate for a 5.1% gain. Total sales increased 8% to $7.58 billion helped by higher gas prices, strong sales of fresh food and consumer electronics.

The company said its comp sales in the United States were up 6% and up 4% internationally. Its preliminary second quarter sales increased 8% to $24.34 billion below analysts’ expectations for $25.13 billion. Costco reports its second quarter earnings on March 12.




Fashion Week Breaking Trends Fall 2013: Plaids, Tartans & Houndstooth
Sycamore Partners Buys Hot Topic for $600 Million