Feb 6, 2014
U.S. retailers' sales chilled by weather and low consumer confidence
Feb 6, 2014
January was a tough end to a tough holiday season for U.S. retailers.
Shoppers last month continued to pinch their pennies, seeking out bargains and paying fewer visits to stores. They also were unnerved by slumping stock markets and impeded from shopping by an unusually cold and snowy January that, because of high heating bills, could hurt retail sales well into the spring, analysts said.
"Consumers are being hit by a perfect storm of events," said Craig Johnson, president of advisory firm Customer Growth Partners. "It's a bloodbath."
Kohl's Corp on Thursday said sales in January were "significantly" lower than expected as shoppers stayed away. The department store chain reported a 2 percent decline in quarterly comparable sales, those online and at stores open at least a year, despite a good start to the holiday season.
Analysts expect a group of nine retailers that report these results on a monthly basis to show a 2 percent rise in comparable sales for January, well below the 4.9 percent growth of a year earlier, according to Thomson Reuters.
Some chains managed to register sales gains, but those came either at the expense of rivals or profit margins.
Costco Wholesale Corp said its same-store sales rose 5 percent in January, with fresh food a popular item for its bargain-seeking members. That contrasted with a quarterly decline at Wal-Mart Stores Inc's Sam's Club chain.
Victoria's Secret parent L Brands Inc posted a much bigger-than-expected jump of 9 percent in comparable sales. But the company said its profit margin was "significantly" lower after it had to deepen discounts and hold sales events longer. The retailer expects only modest sales gains in February.
The consumer mood seemed to sour last month. The Thomson Reuters/University of Michigan's consumer sentiment index slipped to 81.2 in January from 82.5 in December. Confidence fell acutely among households with annual incomes below $75,000.
Also in January, the Dow Jones Industrial Index tumbled 5.3 percent, and the Standard & Poor's 500 slid 3.6 percent, their worst monthly percentage declines since May 2012.
Adding to retailers' woes, the weather was unforgiving, with record cold and heavy snow last month in the Midwest and Northeast.
Cato Corp, a chain of low-priced clothing stores; Fred's Inc, which sells general merchandise; and Stein Mart Inc, an off-price clothing retailer, all blamed Mother Nature for declines in comparable sales.
Sterne Agee analyst Charles Grom said higher home heating bills could crimp consumer spending "well into April."
Clothing chains that cater to teens had another dismal month in January. The Buckle reported a 6.6 percent drop in comparable sales, while at Zumiez Inc, they fell 7.6 percent.
The disappointing sales results follow recent poor reports from many stores. Baird analyst Mark Altschwager estimated that comparable sales at J.C. Penney Co Inc fell 3 percent last month. And last week, Wal-Mart said its profit for the fourth quarter ended Jan. 31 would come at or slightly below its forecast.
Getting shoppers into stores, a source of major concern for retailers during the holiday season, did not seem to improve last month. Walgreen Co managed to report a jump in comparable sales, but the drugstore chain said traffic fell 2.2 percent.
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