Storms, Shopper Fatigue Chill January Comp Sales

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

Frigid temperatures and heavy snowfall stymied shoppers and retail employees last month

Frigid temperatures and heavy snowfall stymied shoppers and retail employees last month

New York—January is normally the slowest month at retail, but this year the Arctic whammy from a polar vortex chilled sales more than ever.

According to Thomson Reuters’ survey of seven retailers, January comparable store sales are 3.5% though Gap Inc and American Apparel haven’t reported in yet. Thomson Reuters projected that when they do, the nine retailers will post 2% growth versus a 4.9% increase in January 2013.

Retail Metrics, a retail research firm, estimated a January comp sales were up 3.1%, said Ken Perkins, president. That actually was slightly better than the 2.2% increase analysts had projected.

“The month was not as bad as feared,” said Perkins. “But it was still a sluggish month for most retailers.”

Besides the winter winds from storms, retailers also faced headwinds due to the overhyped but often underperforming holiday sales season and “shopping fatigue” by consumers.

“Retailers were very promotional for the month, and mall traffic was very sluggish,” said Perkins. “Weather was a major factor for many in the the Midwest and Northeast.”

Forecasts ‘Turned Overwhelmingly Negative’

The cold weather led to a very “slow start” to the early spring selling season with many consumers “cooped up” and not shopping, Perkins said. But Perkins noted that many retailers’ forecast for fourth quarter and full year has turned overwhelmingly negative.

Kohl’s, for example, said today that January sales were “significantly” lower than expected and reported a 2% decline in comp sales for its fourth quarter.

In another report today, Ann Inc. cut its fourth-quarter sales estimate, blaming weak traffic and consumer spending. The women’s specialty retailer estimated its fourth quarter sales would hit $623 million, down from the $640 million it had forecast in November. That’s below analysts’ estimate for $636.4 million in sales.

And Baird analyst Mark Altschwager estimated that comparable sales at JCPenney fell 3% last month though the department store reported early this week a rise in its quarterly comp sales.

Many retailers, including Walmart, Target, Macy’s etc., no longer report monthly sales data, making it difficult to project the entire industry from the from the few that still report.

Below are January sales reports from retailers that still release them. Gap Inc. reports at the end of the day and is expected to show a 1.1% comp decline.

●L Brands posted the strongest comparable store sales for January so far: an increase of 9% ahead of the 0.5% increase analysts expected. Total revenue fell 26% to $731.2 million compared to sales of $986.4 million a year ago.

By retail brand, Victoria’s Secret reported comparable store sales increased 10%, driven by the semi-annual sale. The chain’s online and catalog business, Victoria’s Secret Direct, reported a 12% decrease in sales, “as strength in swim and sport was offset by a decline in apparel,” said Amie Preston, chief investor relations officer.

La Senza, its Canadian lingerie brand, posted a 4% comp store increase while Bath& body Works had a 6% increase.

L Brands also raised its prediction for fourth quarter earnings, “something virtually no retailers have done this quarter,” said Perkins of Retail Metrics. Wall Street has been predicting fourth-quarter earnings of $1.60 a share, and the company now predicts slightly more than that.

Buckle Inc. said comparable store net sales decreased 6.6%, greater than the 1.2% decline that analysts predicted. Total net sales decreased 27.9% to $56.9 million from net sales of $78.8 million

●Zumiez posted a 7.6% decline in its January comp sales ahead of the 3.3% decline analysts expected. Total sales fell 24% to $38.1 million from $50.3 million in the same month a year before.

●Cato Corp. said its comparable store sales in January fell 8% hurt by harsh winter weather that kept shoppers away from its stores.

“January same-store sales results were significantly impacted by winter storms during the month,” says John Cato, chairman, president and chief executive.

Total sales fell 25% to $48.1 million from $63.8 million. For its fourth quarter, revenue fell 7% to $215.5 million from $232 million. 2013 revenue fell 2% to $910.8 million from $933.8 million in 2012.

Cato reiterated its previous forecast for earnings of 11 cents to 15 cents a share in its fourth quarter and full year earnings between $1.84 and $1.88 a share.

●Stein Mart reported its January comparable store sales were down 0.7% slightly higher than the flat comp sales analysts expected.

Total sales were $64.4 million, a decline from last year’s $78.9 million.

Linens, ladies’ boutique and gifts posted the strongest sales for the month, while jewelry, ladies’ sportswear and men’s performed lower than the chain. Geographically, sales were strongest in Florida and the West. For the fourth quarter, Stein Mart posted a 3.1% rise in its comp store sales. Total sales for the quarter were $359.9 million, down from $368.6 million in the same period of last year.

“I am very pleased to report our seventh consecutive quarter of comparable store sales increases and an annual increase that is one percent better than our strong performance last year,” said Jay Stein, chief executive. “Our January sales were clearly impacted by the severe weather throughout most of the country. Factoring this out, our sales results for January were consistent with our performance through year-to-date December.”

●Costco’s January comp sales rose 4%, topping analysts’ average estimate for a 3.3% increase. In its U.S. stores, comp sales were up 5% while international stores edged up 1%. Total revenue was up 6% to $7.99 billion.

Excluding the impact of lower gas prices and foreign currency fluctuations, comp store sales were up 6% in total, up 5% in the United States and overseas up 8%.

Among stronger performing categories were office, automotive, hardware, small appliances, housewares and women’s apparel. The consumer electronics category continued to be weak, with sales falling in the mid-to-high single digit range.