WWD.com/beauty-industry-news/financial/february-comps-dogged-by-weather-503614/

With a late-winter freeze chilling demand for spring apparel, February same-store sales were dull, despite bright spots in the department store channel.

Saks Inc. was the standout of the month in the high-end channel with a 24.7 percent gain, while Nordstrom posted a 9.1 percent rise. The specialty retailers seemed to suffer the most disappointments, analysts said.

The late onset of winter, combined with bitter-cold weather across the eastern U.S., kept consumers from stores for spring buying. According to Weather-Driven Demand Indices compiled by Planalytics Inc., “weather favorability” was negative for 93 percent of the companies the weather firm tracks.

“The only saving grace this year was the fact [that] weather conditions last year in the east were also relatively cold and snowy, making the comparison slightly less daunting,” said Paul Walsh, senior vice president of Planalytics. “On the positive side, spring turned on early in the West and mountain states with temperatures that average slightly above normal.”

Of the retailers tracked by WWD, the specialty sector’s comps average for the month declined 0.6 percent. Mass merchants fared slightly better, posting a 2 percent average increase in sales at stores open at least a year, while department stores continued to benefit from the security of the luxury consumer base and posted an average increase of 4.9 percent.

While weather could be blamed for a lot of the slowdown in growth for February, analysts noted that some retailers were able to hit it out of the park anyway.

“Clearly, the headline is that weather did have a big influence in February,” said Patricia Walker, partner in constuling firm Accenture’s retail practice. “However, I think the bottom line is that those retailers that had great product at the right price and/or had unique product were able to win, even though there were weather issues in February.”

Retail Forward reported that February same-store sales of the retailers it follows showed a 2.6 percent average gain. The composite average in January was a 4 percent gain. Weather was not the only reason retailers’ sales numbers were down, the firm said.

“Apparel specialty stores are losing out to department stores right now, particularly among upmarket households. And the impact of a weak housing market is spreading beyond home improvement stores,” said Frank Badillo, director and senior economist at Retail Forward KnowledgeBase.

This story first appeared in the March 9, 2007 issue of WWD.  Subscribe Today.

In the specialty sector, among retailers posting declines were Ann Taylor, down 2.9 percent; Bebe, down 2.2 percent; Christopher & Banks, down 13 percent; Chico’s, down 4.3 percent; Hot Topic, down 2.7 percent, and Pacific Sunwear, down 5.7 percent.

Christine Chen, retail analyst at Needham & Co., noted that most of the teen retailers missed expectations, including Abercrombie & Fitch, American Eagle and Pacific Sunwear. Others, such as Aéropostale, were in line, and Hot Topic wasn’t down as much as expected.

Abercrombie & Fitch continued a slide that started in September and reported a decrease in comps of 6 percent following a 6 percent loss in January. Gap continued its downward trend, as well, reporting that comps fell 5 percent at its Gap flagships and fell 6 percent at Old Navy stores.

Sales were up 6 percent at American Eagle, up 12.4 percent at Zumiez and up 2.3 percent at Aéropostale.

Julian Geiger, chief executive officer of Aéropostale, said the company was pleased with its February performance and that, despite a challenging retail environment, the company saw a good reaction to its spring merchandise.

American Eagle also said its spring set was well received and drove sales for the month. The company came in short of some analysts’ expectations, but still fared better than many other retailers. Dorothy Lakner, an analyst with CIBC World Markets, said the company missed Wall Street expectations mostly because it had to adjust the comp comparison to account for last year’s extra week.

Flat sales were reported at Banana Republic, Dress Barn and Cato. Top performers included Buckle, up 7.8 percent, and Limited Brands, up 7 percent. Despite its positive gains, Limited missed its original guidance for the month.

The department store sector continued to outperform other segments of apparel retailing in February, still insulated by luxury consumers’ willingness to shop.

“Those with money are still spending, through rain, sleet or snow,” said Chen.

Saks’ 24.7 percent rise in comps was driven by full-price selling of spring lines and an end-of-season sale in some of the company’s flagships, according to the company. Saks said its strongest merchandise areas for the month were women’s designer apparel, shoes, handbags, fine jewelry and accessories. Accessories, especially shoes and handbags, have been cited by many retailers as key to positive sales, said Walker.

Nordstrom and Neiman Marcus, which posted a 6.7 percent gain, also were driven by luxury consumer purchases. Bon-Ton reported a 14.6 percent increase, Kohl’s was up 4.4 percent and Federated increased 1.2 percent. A few department stores didn’t fare as well. Dillard’s, Gottschalks and J.C. Penney posted declining same-store sales of 9 percent, 3.6 percent and 0.2 percent, respectively.

The mass retailers also were affected by weather trends, but turned in largely positive results. Target posted a 5.7 percent increase, beating expectations.

Both Ross Stores and TJX Cos. were in line with expectations, turning in same-store sales gains of 1 percent and 2 percent, respectively. Wal-Mart’s 0.4 percent increase at the discount stores was disappointing. The warehouse clubs did well in February; BJ’s was up 3 percent and Costco was up 4 percent.

Analysts said February was the least important month of the year, and of the first quarter, for most retailers. March is typically more critical. That importance will be increased this year by an early Easter, which shifts the week prior to the holiday into March.

February Same-Store Sales
February
% Change
January % Change
December % Change
DEPARTMENT STORES
2007
2006
2007
2006
Bon-ton
14.6
-1.6
6.4
-5.8
Dillard’s
-9.0
-2.0
-3.0
-5.0
Federated
1.2
1.0
8.6
4.4
Gottschalksq
-3.6
2.7
-1.0
0.6
Kohl’s
4.4
3.4
8.7
3.0
Neiman-Marcus
6.7
3.0
11.3
7.3
Nordstrom
9.1
4.9
11.1
9.0
J.C. Penney
-0.2
2.3
3.6
2.6
Saks Fifth Ave. Enterprises
24.7
-6.7
11.4
11.1
Stage Stores
1.4
-0.9
7.5
2.2
Average:
4.9
0.6
6.5
2.9
 
SPECIALTY CHAINS
Abercrombie & Fitch
-6.0
5.0
-6.0
-1.0
Aeropostale
2.3
-5.4
5.4
1.7
American Eagle
6.0
6.0
17.0
13.0
Ann Taylor
-2.9
5.6
-10.2
-5.3
Banana Republic
0.0
-11.0
14.0
2.0
Bath & Body Works
2.0
4.0
19.0
5.0
Bebe
-2.2
1.6
0.8
4.0
Buckle
7.8
-0.4
7.8
3.6
Cache
1.0
-3.0
10.0
4.0
Cato
0.0
-7.0
-7.0
-6.0
The Children’s Place
5.0
1.0
3.0
5.0
Chico’s FAS
-4.3
5.7
-3.5
-2.0
Christopher & Banks
-13.0
-6.0
-4.0
-7.0
Citi Trends
NA
11.7
3.2
-0.1
Claire’s
1.0
4.0
9.0
0.0
Deb Shops
-2.0
5.0
-3.8
-7.5
Dress Barn
0.0
5.0
8.0
5.0
Gap (U.S. stores)
-5.0
-7.0
-6.0
-9.0
Guess
NA
8.6
NA
9.6
Gymboree
1.0
18.0
0.0
15.0
Hot Topic
-2.7
-8.4
-6.6
-5.1
Limited Brands (total apparel)
7.0
5.0
12.0
-7.0
Mothers Work
-4.7
-2.2
-6.0
-0.3
New York & Company
2.7
-12.8
2.3
3.2
Old Navy
-6.0
-14.0
-1.0
-10.0
Pacific Sunwear
-5.7
-3.1
-7.7
-3.2
Rite Aid
2.2
2.3
4.5
2.6
United Retail
-4.0
-1.0
2.0
-2.0
Victoria’s Secret
2.0
5.0
7.0
10.0
Walgreen
8.6
5.7
10.8
7.9
Wet Seal
5.0
29.3
3.6
1.3
Wilsons
-24.7
-9.3
-20.0
-23.1
Zumiez
12.4
28.0
13.0
11.5
Average:
-0.6
2.0
2.2
0.5
 
MASS MERCHANTS
BJ’s Wholesale Club
3.0
1.6
2.0
0.6
Costco
4.0
7.0
3.0
9.0
Ross Stores
1.0
6.0
2.0
2.0
Stein Mart
-1.9
-8.5
-1.9
0.0
Target
5.7
3.6
5.1
4.1
TJX Cos.
2.0
1.0
4.0
6.0
Wal-mart (discount stores)
0.4
2.9
1.9
1.3
Average:
2.0
1.9
2.3
3.3
Tally:
Up
28
31
33
31
Flat
3
0
1
2
Down
17
19
15
17
Total
48
50
49
50