Mar 1, 2012
Weather helps store sales; even Gap up
Mar 1, 2012
Mild weather helped spur consumers to buy spring clothing in February, leading to broad sales gains at top U.S. chains, and even perennial laggard Gap Inc (GPS.N) posted its first increase in eight months.
Top retailers such as discounter Target Corp (TGT.N), department store chain Macy's Inc (M.N) and Victoria's Secret parent Limited Brands Inc (LTD.N) reported same-store sales gains for February that handily beat Wall Street forecasts.
Gap same-store sales rose 4 percent, while analysts on average expected a 1.4 percent decline, according to Thomson Reuters data. Shares of the company, which benefited from a 12 percent jump at its Banana Republic chain, rose 9.9 percent in premarket trading.
Target, whose February same-store sales rose 7 percent last month, and Macy's, which reported a 4.6 percent gain, each forecast more increases for March.
But with gas prices on the rise, retailers cannot bank on more of the same-broad based gains in the coming months, and should instead gird themselves for an intense fight for shoppers, an analyst said.
"Retail is in a share-taking environment," said Joel Bines, managing director of consulting firm AlixPartners. "Shoppers will end up consolidating trips."
That could mean extra pressure on struggling retailers, especially those that don't offer enough merchandise to allow shoppers to buy items at one place.
As of Thursday, a gallon of gas in the United States cost $3.74, up 35 cents from a year ago, according to the American Automobile Association.
For now, some positive signs in the economy have trumped rising gasoline prices. The housing market appears to be stabilizing, and the unemployment rate fell to 8.3 percent in January from 9.1 percent in August. The University of Michigan's consumer confidence survey rose for the sixth straight month in February.
February sales at both chains breezed past Wall Street forecasts. Nordstrom's same-store sales rose 10.2 percent.
Other retailers that beat analysts' estimates on Thursday include off-price TJX Cos Inc (TJX.N), where same-store sales were up 9 percent, as well as teen-oriented The Buckle Inc (BKE.N) and Zumiez Inc (ZUMZ.O).
"We believe that very favorable weather patterns during the month helped boost demand for spring apparel," TJX Chief Executive Officer Carol Meyrowitz said in a statement.
It remains to be seen whether the boon to February will mean consumers have already completed their spring wardrobes, putting put pressure on March and April results. TJX, for example, forecast only a 1 percent to 3 percent increase for March and April same-store sales, combined.
Limited, which also owns Bath & Body Works, said on Thursday that sales at stores open at least a year rose 8 percent last month, above the analysts' average forecast of 6.2 percent.
On Wednesday, Costco Wholesale Corp (COST.O) said its same-store sales had risen 8 percent in February, outpacing the 7.6 percent increase that analysts expected, according to Thomson Reuters data. Much of the warehouse club chain's gains in the past year have come from shoppers seeking cheaper gasoline.
Wet Seal (WTSLA.O) was one of the few chains to report a decline in sales, but the fall of 5.8 percent was less steep than expected. Fred's Inc (FRED.O) reported an unexpected drop in sales.
Home decoration and furniture chain Pier 1 Imports Inc (PIR.N) said its same-store sales for the full holiday quarter had risen 10.3 percent.
(Reporting By Phil Wahba in New York and Jessica Wohl and Nivedita Bhattacharjee in Chicago; Editing by Lisa Von Ahn)
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