February Sales Rise as Shoppers Look for Clothes, Housewares

Heavy snowstorms took out a chunk of February's sales, but retailers still managed to post stronger numbers. Shoppers appear to be coming back -- however slowly and carefully -- and spending again on non-essentials like clothes and housewares.

Merchants showed a 4% increase in comparable sales (for stores open at least a year) during February above the same time last year, according to a tally of major retailers by Thomson Reuters. Apparel stores and discounters showed the most improvement, rising 6.8% and 5.8%, respectively.

Much of the improvement is a factor of the very weak sales in the year-ago period, when comparable sales dropped 4.7% as the recession took hold. Department stores, which rose 3.3%, have a particularly easy comparison, after dropping 9% in February 2009.

"Shoppers remain deal-focused and inclined to trade down among products and brands, but they are clearly ready to shop more and make some of the purchases they avoided during the recession," said Frank Badillo, senior economist at consulting group Retail Forward. In a report, he pointed out that Retail Forward's monthly survey found the percentage of shoppers planning to spend less during the coming month had dropped to the lowest levels since early 2008 and the percent planning to hold their spending steady rose past 50% for the first time in the same time period.

Stores reported increases in traffic and transaction volume, but most also said it was offset by lower average prices on purchases. Shoppers remain reluctant to part with their money, unless they get some incentive. Abercrombie & Fitch (ANF), which showed comparable sales increases in all its chains for the first time in a year, noted all its brands carried their winter sale into February. Abercrombie's sales were up 5%, led by an increase of 8% at the Abercrombie and Fitch chain, while Hollister stores turned positive, with a 1% increase.

Moving Beyond Basics


But analysts pointed out that shoppers appear to be moving beyond essential items such as food and toiletries and have started looking at clothes and home decor again. Both TJX Cos. (TJX) and Kohl's Corp. (KSS) -- which had comparable sales increases of 10% and 3.7%, respectively -- noted sales of housewares rose during the month. TJX, parent of discounters Marshall's and TJ Maxx, said comparable sales of home fashions at those chains were up 19% and its HomeGoods stores had comparable sales increases of up 14%. J.C. Penney Co. (JCP) and Target Corp. (TGT), whose comparable sales rose 1.2% and 2.4%, respectively, both reported weak home sales for the month.

Apparel stores also saw an increase, thanks in part to easy comparisons to a weak post-holiday season last year. Gap Inc. (GPS) sales were up 3%, compared to a 12% drop in 2009. Its flagship Gap stores and international operations were flat, while Banana Republic was up 6% and Old Navy up 5%. Helped by good Valentine's Day sales, Limited Brands (LTD) had a comparable sales increase of 10%, with Victoria's Secret sales up 10% and Bath & Body Works up 11%.

The apparel retailers' sales still came in above expectations, noted Ann Poole, retail analyst at investment bank Stephens Inc. In a report to investors, she singled out Abercrombie and Pacific Sunwear (PSUN) as two beaten-down retailers with potential to improve sharply in coming months.

Aeropostale (ARO), was among the few apparel chains to post sales increases in February on top of growth a year ago. Its same-store sales were up 7%, compared to an increase of 11% in February 2009, but it estimated snowstorms caused sales to drop by low single-digit percentages during the month.

Heavy Weather


Indeed, most retailers said results were affected by flooding in California and record snowstorms across the south and northeast. Most reported that the weakest regions during the month were the Northeast and Mid-Atlantic states and the weakest sales week was the last, when heavy snows hit those areas. The concentration of heavily populated urban areas gives the Northeast and California markets an outsize effect on sales.

Macy's (M) estimated that its sales for the month would have been up about 5%, if not for the effect of the snowstorms. As it is, the department store company still posted a comparable-sales increase of 3.7%, helped by a 38% jump in online sales and improved sales at both Macy's and Bloomingdale's stores.

Department stores do appear to be on the mend, if only by comparison to a tough year-ago period. Nordstrom (JWN) posted comparable sales increase of 10.3% and online sales continued to rise, up 50.3% for the month. Nordstrom's department stores were up 9.3% while the Rack outlets, which had performed well through the recession, were up only 2.3%. Saks Inc. (SKS), which had suffered more than most due to its luxury focus, posted a 2% increase, thanks to to stronger sales of women's designer clothes, shoes and jewelry.

Most retailers are holding high hopes for March, thanks in part to an earlier Easter this year, which should shift from April some apparel and home sales, just as spring inventories hit stores. For example, Target said it expects March comparable sales to be up in the mid to upper single-digit percentages above last year's, but April's will be down in the mid single-digit range; TJX forecast March sales will be up 2% to 4% and April's flat to up 2%.

The seesawing recovery is expected to lurch into the spring.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum