February was further proof of retailing’s new world order: it’s a market share game — and only the strong are truly thriving.
Last month was one of the best Februarys in years in terms of comparable-store sales thanks to buoyant Valentine’s Day sales, an extra day on the calendar courtesy of leap year, new spring trends and the favorable weather that allowed shoppers to imagine wearing the products. Not even precipitously rising gas prices could dampen the enthusiasm of consumers, whose pent-up demand led to better-than-expected results for many stores.
The February Thomson Reuters Same Store Sales Index came in with a 4.7 percent increase, comfortably ahead of the final estimate of a 3.4 percent rise for the month. There were far more winners than losers last month, but even stores with comparable-store sales declines outperformed analysts’ expectations. A rare exception was Kohl’s Corp., down 0.8 percent versus an anticipated flat finish.
And in continuing proof that the high end remains strong, comps at Nordstrom Inc. rose 10.2 percent, nearly twice the anticipated increase. Nordstrom’s full-line stores jumped 11.9 percent and Rack comps rose 5.9 percent. Saks Inc. posted a 6.6 percent gain, 1.1 points above its estimated level. Women’s contemporary, handbags, and men’s accessories, shoes, furnishings and contemporary were strongest. RELATED STORY: Consumer Confidence Back Up in February >>
“There was a bit of a rising tide [effect] almost for everyone,” said Sherif Mityas, a partner in the retail practice at A.T. Kearney. “Folks that did well during the holidays continued to do better and those that struggled continued to struggle. The winners are winning more and the losers are losing even more. That dynamic is going to continue. Consumers are spending, but they’re going to be choosy. There’s clearly going to be some hard times ahead” for certain retailers.
“We’re in a market share-taking game,” said Bines, who heads the retail practice at AlixPartners. “Retail is not growing faster than inflation. If the laggards don’t do something, there will be the usual mergers and disruptions.”
“February can often suggest what trends are working as retailers move into the heart of spring selling,” said Adrienne Tennant, a retail analyst at Janney Capital Markets, noting the success of skinny-leg colored jeans, colorblocking and print dresses.
Rather than report comps of negative 1.4 percent as expected, Gap Inc. instead posted positive same-store sales in all domestic divisions. Gap Inc. had a 4 percent gain, with increases of 12 percent at Banana Republic, 5 percent at Old Navy and 1 percent at Gap, erasing a 9 percent decline in international sales. “We’re pleased we delivered positive comps across our North America businesses during February and that customers responded well to our spring product,” said Glenn Murphy, chairman and chief executive officer of Gap Inc.
Limited Brands Inc. continued its string of strong months, checking in with an 8 percent increase headlined by Victoria’s Secret’s 10 percent jump.
Macy’s Inc.’s 4.6 percent advance — 1.1 points above forecasts — was boosted by a 31.3 percent hike in online volume. Terry Lundgren, chairman, president and ceo, said, “We saw good consumer response to our early spring deliveries in women’s, accessories, shoes, cosmetics, men’s and home.” RELATED STORY: February Comp Crux >>
Value retailers performed well, with Target Corp. up 7 percent, while off-price giants The TJX Cos. Inc. and Ross Stores Inc. both rose 9 percent, all ahead of estimates. “Very favorable weather patterns during the month helped boost demand for spring apparel,” said Carol Meyrowitz, ceo of TJX. “Traffic was up at all of our divisions, driving excellent performance across the board.”
Gregg Steinhafel, chairman, president and ceo of Target, said the company was “very pleased with the pace of our sales since the holiday season, though we continue to plan for a first-quarter comparable-store sales increase of around 4 percent.”
In the teen sector, The Buckle Inc. and Zumiez Inc. outperformed estimates with increases of 14.8 and 14.2 percent, respectively, but The Wet Seal Inc. suffered a 5.8 percent decline, still finishing ahead of Wall Street’s prediction of a 9 percent shortfall.
Stage Stores Inc.’s 3.7 percent increase was more than twice the 1.5 percent gain expected. The Bon-Ton Stores Inc. registered a 0.7 percent pickup for the month, paced by strength in better sportswear, footwear, cosmetics and especially in fragrances.
The number of retailers reporting comps is ever-shrinking, however. Dillard’s Inc. stopped reporting them last month, joining retailers such as Wal-Mart Stores Inc., J.C. Penney Co. Inc., Neiman Marcus Inc., J. Crew Group Inc., Chico’s FAS Inc. and Abercrombie & Fitch Co. that no longer release same-store sales on a monthly basis. “No one knows what the business is really like anymore,” said one senior retail executive who requested anonymity. “Retailers combine online sales with store sales. It’s truly not comparable-store sales. You can’t get a reading anymore.”
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