NEW YORK -- American consumers continued to search for bargains in February as discount and off-price retail chains continued to gain market share, posting double-digit comparable-store gains in many cases and...
NEW YORK -- American consumers continued to search for bargains in February as discount and off-price retail chains continued to gain market share, posting double-digit comparable-store gains in many cases and driving the overall industry to better-than-expected monthly sales results.
While those hoping for signs of a turnaround at Gap Inc. were disappointed by its 17 percent comp drop, J.C. Penney provided the single biggest upside surprise with a 12.5 percent gain in February comps, more than twice the expected rate. Penney's shares were rewarded with a $2.08, or 10.8 increase, price boost, closing the day at $21.27 in New York Stock Exchange trading.
Value-oriented stores such as Wal-Mart, Target, Kohl's, Ross Stores and TJX clearly benefited from shoppers' demand for value and convenience in February, but department and specialty apparel stores are still facing an uphill battle to win back consumer dollars. Spring-like weather buoyed February results, allowing for earlier and stronger full-price spring selling and potentially setting the stage for improved gross margins in the first quarter.
"Consumers aren't exactly on a spending spree, but are buying the things they need," Todd Slater, an analyst at Lazard Freres, said.
Shari Schwartzman Eberts at J.P. Morgan said February was "a continuation of the discount store domination driven by consumers' real desire for value and off-the-mall convenience."
The Gap division's comp decline of 24 percent among its U.S. stores weighed down its parent; it wasn't alone among apparel specialists coping with large same-store setbacks. Eddie Bauer was down 17 percent and Abercrombie & Fitch off 9 percent.
Gap's chief financial officer Heidi Kunz said on a pre-recorded conference call, "Gap (stores) did not sell as much spring fashion inventory as expected and we will be clearing merchandise in March."
Kurt Barnard, president of Barnard's Retail Trend Report, noted that the gains among the value-oriented stores "came at the expense of traditional department stores again. Dillard's, Nordstrom, Federated, May and Saks were bad. Their recovery will be tough as the economy improves. They face a difficult year ahead."
Angela Selden, the North American managing partner for Accenture's retail industry group, said department store continue to struggle as they have lost their ability to be meaningful to core customers. "In an attempt to be all things to all people, they are challenged to be meaningful to any kind of customer," she said.
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