Post Holiday Retail Sales Up
Thursday, February 8th 2007, 8:31 am
By: News On 6
NEW YORK (AP) _ The nation's retailers rebounded in January from their disappointing holiday season as shoppers used gift cards to buy winter and spring merchandise. The arrival of frigid temperatures in much of the country helped clear out what was left of cold weather items.
As retailers reported their sales Thursday, winners included Limited Brands Inc., Nordstrom Inc., and Federated Department Stores Inc. Wal-Mart Stores Inc. beat Wall Street estimates, though its monthly gain was modest. Even Gap Inc., which has been long struggling with disappointing sales, beat analysts' expectations, though its sales were still sluggish.
Among the losers were Costco Wholesale Corp., AnnTaylor Stores Corp. and Chico's FAS Inc.
``Across the board, the numbers are decent,'' said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. The one area of weakness was women's apparel stores, which he believes were hurt by the weather. (Winter weather) came too late,'' he said.
Of the merchants that reported so far, 27 beat estimates, while 18 missed expectations, according to Thomson Financial. Two met projections.
The solid performance in January was encouraging as it follows a largely disappointing holiday season. While January is the least important month of the retail calendar, its significance has grown over the past five years because of the impact of gift cards. Retailers don't include gift card sales in their monthly tallies until the cards are redeemed, and the bulk of cards given for the holidays are used in January.
The delayed arrival of winter weather had a mixed impact on sales. It helped stores that still had plenty of heavy boots and coats to clear out but it hurt those that had converted most of their stores' offerings to spring merchandise.
Merchants also benefited from a steady job market, which helped send consumer confidence slightly higher last month.
Still, stores do face challenges ahead as the housing market remains soft and consumers face the possibility that job growth may be sluggish. Last week, the Labor Department reported that employers slowed hiring in January, pushing the unemployment rate to a four-month high. What's more alarming is that shoppers may be on the verge of tapping out _ a government report issued last week said Americans' personal saving rate dipped into negative territory in 2006 as consumers deplete their saving or increase their borrowing to finance their spending.
``I believe that consumers are still feeling confident about buying, but I think it is a measured confidence,'' said Janet Hoffman, managing partner of the North American retail division of Accenture. ``If people are not saving, they are not going to be ready to buy that next house. There is so much economic stimulation when they buy that next house,'' she said.
Wal-Mart, the world's largest retailer, had a modest 2.2 percent rise in same-store sales, beating the 1.8 percent estimate from Wall Street analysts surveyed by Thomson Financial. Same-store sales are sales at stores open at least a year and are considered the industry standard for measuring the health of a retailer.
The company said lower temperatures throughout the United States drove sales of cold weather related items.
Costco reported a same-store sales gain of 2 percent, below the 3 percent Wall Street estimate. Costco blamed the shortfall on a quirk in the calendar: There was one less day during the five-week reporting period due to the timing of New Year's. The shift negatively affected same-store sales by about 3 percent, according to Costco.
Federated had an 8.6 percent gain in same-store sales, well above the 4.6 percent estimate from Wall Street. The same-store results include only the Macy's and Bloomingdale's stores that existed before September, when the company transformed most of the former May Department Stores Co. branches to Macy's units.
J.C. Penney Co. had a 3.6 percent gain in same-store sales at its department store business, a bit above the 3.5 percent estimate.
Gap, whose CEO resigned last month amid a string of disappointing quarters, announced that same-store sales were unchanged from the year ago. That was much better than the 7.7 percent decline that Wall Street expected. The apparel chain continued to shake up its management, announcing Thursday that the head designer for Gap North America was leaving.
Limited had an 11 percent gain in same-store sales, beating the 7.8 percent forecast.
AnnTaylor suffered a 10.2 percent decline in same-store sales, worse than the 5.4 percent Wall Street expected.
Chico's said same-store sales fell 3.5 percent, worse than the 1.5 percent analysts expected.
On Wednesday, American Eagle Outfitters Inc. reported a 17 percent gain in same-store sales, above the 10.9 percent estimate from analysts. The company noted in a release that initial response to the spring collection has been positive.
But teen rival Hot Topic Inc. suffered a 6.6 percent decline in same-store sales, though the results were slightly better than the 6.1 percent projection.