NEW YORK — Luxury’s momentum continued in January while consumers were also lured into stores by clearance sales and the arrival of new spring lines. Chilly weather and gift-card redemptions also drove traffic.
In turn, retailers reported strong comparable-store gains. The Goldman Sachs Retail Composite Comparable-Store Sales Index came in with a 5.9 percent increase for the month, its highest gain since September 2003 when it also showed a 5.9 percent increase.
This story first appeared in the February 6, 2004 issue of WWD. Subscribe Today.
Noteworthy were the high-end retailers, Neiman Marcus, Saks Fifth Ave. and Nordstrom, which posted stellar same-store sales for a third month in a row.
Of the 50 retailers tracked by WWD, 37 posted comparable-store sales gains for the month while none came in flat, and 13 reported declines. On average and by retail channel, department stores delivered the strongest gains followed by mass merchants and then specialty retailers.
In many cases, January same-store sales results exceeded expectations, which triggered upwardly revised earnings guidance. However, analysts tempered their enthusiasm. They were hesitant to declare an end to the sales doldrums that have been plaguing key segments in the industry.
Still, there were several analysts who were glad to see robust gains. They noted that several retailers skillfully managed their holiday inventories, leaving less carryover at the end of the month to mark down. Moreover, analysts and retailers were pleased consumers positively responded to spring merchandise.
“Considering January tends to be insignificant to sales and profits, these numbers are too good to ignore,” said Adrianne Shapira, a retail analyst with Goldman Sachs.
Dana Telsey, a retail analyst with Bear Stearns, said the key takeaway is that retailers took in better margins, which was done by either selling more goods at full price (a sign that shoppers liked the merchandise) or by garnering stronger margins at markdown.
“The month accomplished what it should,” added Elizabeth Pierce, a specialty retail analyst with Sanders Morris Harris. “It was a clean-up month.”
At Abercrombie & Fitch and Limited Brands, results were enhanced by sales events. Comparable-store sales at Limited Brands were lifted by better-than-expected sales at its Bath & Body Works, Limited and Victoria’s Secret stores. The company said results at the three chains were driven by sales events, which boosted traffic, but also narrowed margins. Notably, a shift in the timing of the Victoria’s Secret semiannual sale moved part of the event into January, affecting year-over-year comparisons.
Despite the clearance nature of January, retailers such as J.C. Penney, Gap, American Eagle Outfitters, Aeropostale and Urban Outfitters said they saw positive responses to the arrival of new spring lines, which also fattened margins.
Richard A. Hayne, chairman and president of Urban Outfitters, told Wall Street that a “positive response to our spring merchandise, increased sales and redemption of holiday gift cards, plus growth in catalog distribution, helped drive January gains. January’s exceptionally strong sales performance bodes well for first-quarter results.”
And at Gap Inc., Sabrina Simmons, senior vice president and treasurer, said on a prerecorded call that “regular-price selling was up year-over-year, supported by disciplined inventory management and strong customer response to spring product.”
January was also notable because retailers praised the weather during the month, instead of blaming it for lousy comps. Regarding frigid temperatures, sales in the Northeast were particularly strong. This was on top of a strong, post-holiday selling season at the beginning of the month, and a tax-free weekend in the state of New York during the last week of the month. Moderate players, such as Kohl’s and J.C. Penney, said they experienced the largest comp increases in the Northeast.
Noteworthy was men’s wear, which led the way for Kohl’s, Mervyn’s and Marshall Field’s during the month. Sears, too, posted low-single-digit increases from men’s, while women’s advanced in the mid-single-digit range.
It was a similar story from the mass retailers, with Target and Wal-Mart counting the Northeast as their strongest market for the month. “Cold weather positively impacted our apparel sales,” said Wal-Mart, which added that sleepwear and outerwear were strong sellers. Wal-Mart also saw men’s wear leading the way, along with boys’ and girls’ apparel. Among mass merchants, only Retail Ventures saw comps decline, citing lower-than-expected markups in both December and January.
Janet Hoffman, a partner with Accenture’s retail practice, said the “great month” reflects growing confidence in the economy by consumers who are loosening up their spending. Hoffman also noted that consumers are seeing improvements in the product and how it’s merchandised.
“Retailers are getting the right product at the right places at the right time,” Hoffman said.
January Same-Store Sales
January 2004 % of Change, December 2003 % of Change, January 2003 % of Change
Bon-Ton (5.0), (1.9), 8.9
Dillard’s 2.0, (4.0), (5.0)
Federated 5.5, 1.2, (1.2)
Gottschalks 8.6, 0.6, 2.0
Kohl’s 0.3, (1.2), 5.5
Marshall Field’s 4.3, (0.3), (2.6)
May Co. 5.3, 1.1, (4.4)
Mervyn’s (3.5), (7.3), (6.6)
Neiman Marcus 12.8, 14.8, (2.8)
Nordstrom 8.7, 9.1, 0.8
J.C. Penney (dept. stores) 6.4, 4.3, (3.8)
Saks Dept. Store Group 3.3, 2.9, 0.0
Saks Fifth Ave. Enterprises 10.9, 9.6, (4.7)
Sears Roebuck (U.S. stores) 4.6, (0.8), (8.0)
Stage Stores 2.1, 1.2, (5.2)
Average: 4.4 , 2.0, (1.8)
Abercrombie & Fitch 2.0 , (13.0), 3.0
Aeropostale 17.7, 5.7, 4.6
American Eagle (U.S. stores) 0.6, (6.1), 3.2
Ann Taylor 3.7, 26.2, (10.3)
Banana Republic (1.0), 10.0, 11.0
Bebe 4.8, 7.0, (6.9)
Buckle 0.5, 4.8, 4.3
Cache 10.0, 3.0 , 5.0
Cato (8.0), 0.0, (5.0)
Charming Shoppes (3.0), 4.0, (1.0)
Chico’s FAS 19.5, 24.3, 8.1
Christopher & Banks (15.0), (7.0), (9.0)
Claire’s 10.0, 6.0, 8.0
Deb Shops 5.0, (7.0), (5.0)
Dress Barn 5.0, (1.0), (2.0)
Gadzooks (19.2), (25.2), (7.7)
Gap (U.S. Stores) 6.0, 0.0, 7.0
Goody’s Family Clothing (1.6), 0.5, (4.8)
Guess 9.5, 13.1, (1.6)
Hot Topic 4.7, 10.1, 13.7
Limited Brands 23.0, 6.0, 2.0
Mothers Work 2.0, (5.4), 4.7
Old Navy 3.0, 2.0, 27.0
Pacific Sunwear 12.4, 12.0, 20.4
Talbots (11.8), (3.8), (2.9)
United Retail (5.0), 2.0, (10.0)
Wet Seal (21.4), (7.3), (25.1)
Wilsons (0.8), (6.8), 0.5
Average: 1.9, 1.9, 1.1
Retail Ventures (1.2), 3.0, (6.4)
Ross Stores 4.0, 4.0, (2.0)
ShopKo 3.2, (2.1), (2.6)
Stein Mart 5.7, 3.5, (12.0)
Target (discount stores) 5.1, 5.6, 0.3
TJX 2.0, 4.0, (2.0)
Wal-Mart (discount stores) 5.3, 3.9, 2.6
Average: 3.4, 3.1, (3.2)
Up 37, 30, 21
Flat 0, 2, 1
Down 13, 18, 28
Total 50, 50, 50
SOURCE: COMPANY REPORTS
PARENTHESES INDICATE DECLINES