Retailers Report Disappointing Sales Last Month
Thursday, March 8th 2007, 8:31 am
News On 6
NEW YORK (AP) _ The nation's retailers had a slow start to the spring season as unseasonably cold weather in February chilled demand for lightweight apparel and left merchants with disappointing sales. The slowing economy, particularly the weakening housing market, could challenge shoppers in the months ahead.
As merchants reported monthly sales results early Thursday, those with disappointing results included Wal-Mart Stores Inc., Costco Wholesale Corp. and Limited Brands Inc. Meanwhile, high-end stores like Nordstrom Inc. continued their winning streak.
``Cooler weather clearly dampened spring apparel sales,'' said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. ``Customers were not shopping for capri pants.'' He noted that winter storms in the Midwest and East Coast hurt Valentine's Day sales.
But Perkins also said major concerns for consumer spending in the months ahead are the defaults and delinquencies in the mortgage industry. That, coupled with the decline of mortgage equity withdrawls that give consumers extra cash, could curtail spending.
According to Thomson Financial, of 35 merchants that reported February same-store sales results so far, 10 beat estimates, while 24 missed and one met expectations. Same-store sales are sales at stores open at least a year and are considered the best measure of a retailer's health.
The muted sales reports followed a rebound in January, when the late arrival of winter weather helped clear out cold weather items like boots and coats. But that meant there was little for shoppers to buy last month.
While February is one of the least important months of a retailer's calendar, merchants do hope to get some idea of which spring fashion trends are resonating with shoppers. Some retailers like J.C. Penney Co., are already seeing an improvement in sales in the current month. Still, there's concern that shoppers will finally turn frugal because of the housing market's continuing slump, and that last week's stock market tumble might also cause shoppers to be more conservative.
There's also the lingering specter of higher gasoline prices. Gas has jumped above $3 a gallon in some parts of California and Hawaii, and may reach that level in other parts of the country when the summer driving season approaches.
Wal-Mart, dragged down by languishing sales at its namesake stores, reported a slim 0.9 percent gain in same-store sales, below the 1.5 percent estimate from Wall Street analysts surveyed by Thomson Financial. Wal-Mart's namesake division posted a 0.4 percent same-store sales gain, while Sam's Club had a 3.9 percent gain.
The world's largest retailer, which stumbled last year with a merchandising strategy that was too trendy, blamed the sales shortfall on the continued weakness in the home and apparel business. Wal-Mart said those two businesses should remain soft through the spring.
Costco had a 4 percent increase in same-store sales, below the 5.1 percent estimate.
Limited had a 3 percent increase in same-store sales, below the 4 percent estimate. The company had warned that bad weather affected Valentine's Day sales at its Victoria's Secret and Bath & Body Works chains.
Bebe Stores Inc. had a 2.2 percent decline in same-store sales, its first monthly decline in 46 months. Analysts expected a 2.2 percent gain.
Pacific Sunwear of California Inc. suffered a 5.7 percent decline in same-store sales, worse than the 3.7 percent analysts expected.
Pier 1 Imports Inc., which continues to struggle, saw same-store sales decline 8.4 percent, more than the 4.4 percent forecast.
Penney had a 0.2 percent decline in same-store sales in its department store business, below the 0.5 percent analysts expected. The company said sales improved at the end of last month, particuarly in areas where weather turned warm. It added that customer response to its newly developed lingerie line called Ambrielle and an exclusive collection from Liz Claiborne Inc. has been positive.
Meanwhile, high-end stores continued to shine. Nordstrom reported a 9.1 percent increase in same-store sales in February, beating the 5.7 percent estimate.
On Wednesday, at Saks Inc., which operates Saks Fifth Avenue, same-store sales surged 24.7 percent, helped by higher sales of full-price merchandise and an end-of-season consolidation sale in certain flagship stores. Analysts expected 6.4 percent.