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Department Store Comps Shine

Insulated by a luxury consumer base willing to dole out big bucks on pricy items, the department store channel delivered stellar sales.

Insulated by a luxury consumer base willing to dole out big bucks on pricy items, the department store channel delivered a stellar sales performance in January.

Top performers included Saks Fifth Ave. Enterprises, Neiman Marcus and Nordstrom, with same-store sales gains of 11.4 percent, 11.3 percent and 11.1 percent, respectively.

Other retailers in the mass and specialty channels that did well cited more favorable weather conditions as well as gift card redemption for their gains. A quick drop in temperatures at the end of January helped drive late sales and clearance of cold-weather inventory for some retailers, but those who had their spring mix out felt a chill.

“Weather was a factor, but it cut both ways depending on what a retailer’s inventory and fashion positions were,” said Ken Perkins, president, Retail Metrics LLC.

Of the retailers tracked by WWD, 33 out of the 49 companies reporting same-store sales posted increases for January. There were 15 decliners, and one was flat. Overall, the department store sector was the strongest with a 6.5 percent average increase, followed by the mass merchant sector with an increase of 2.3 percent and specialty stores with a 2.2 percent average gain.

In the department store channel, Federated posted a robust 8.6 percent comps gain that the company attributed to an “outstanding performance” in its legacy Macy’s and Bloomingdale’s stores. Sales were driven by gift cards and colder weather.

Kohl’s was up 8.7 percent, also driven by weather and gift cards. Bon-Ton reversed a negative trend over the last few months with a 6.4 percent increase.

Continued strong performances in the department store sector have been driven by a combination of factors, Perkins said. Sales have been fueled by a “fashion-right” focus to attract younger teens, who increasingly list the channel as a primary shopping destination in recent surveys. The segment’s comps were also impacted by consolidation in the industry, which has lead to fewer stores and less competition in malls, Perkins added.

According to Retail Forward, January same-store sales growth expanded 4 percent. That was down from year-ago results of a 5.1 percent gain but is an improvement over last month’s 3.2 percent growth. “The underlying numbers suggest a strong start to the year. Shoppers were out in force as a result of gift cards, the letup in gas prices and favorable weather,” said Frank Badillo, director of the Retail Forward KnowledgeBase and senior economist for the company.

January showed more positive same store sales surprises than negative, said Dana Telsey, chief research officer, Telsey Advisory group. Some companies who did better than expected could report higher earnings over the next month or two but that remains to be seen.

From an economic perspective, sources said consumers are still spending, buoyed by an economy that has continued to do well despite predictions to the contrary regarding housing, energy costs and consumer confidence.

“Consumer spending has yet to slow noticeably under the weight of uncertainties regarding the valuation of housing,” said John Lonski, chief economist for Moody’s Investor Services.

“The most important factor [in retail sales figures] still remains the underlying strength of the economy and job market here, which is giving consumers the confidence to go out and continue to spend,” Perkins said.

The comp performance in January was the strongest retailers have reported since August and September, Perkins pointed out. It remains to be seen, however, how much January’s results were driven by gift card redemption or if it really signals a reversal of weaker same-store sales growth, he said. (See related story, this page.)

Regarding the mass merchants, results were solid. Target reported a 5.1 percent increase in same-store sales, about equal to the comparable period last year and just higher than December’s numbers. TJX Cos. also reported a respectable comps gain of 4 percent. Wal-Mart continued to show some weakness: It’s discount stores reported a low 1.9 percent comp gain, which was within its guidance.

Specialty chains presented the most mixed results of the month, with women’s specialty chains, more than teen or other stores, suffering the worst declines.

Ann Taylor continued to slide, reporting a 10.2 percent decline in same-store sales, its fourth month of consecutive declines. Chico’s also reported its fourth straight month of declining comps with a 3.5 percent decrease.

Gap continued to struggle in January with a 6 percent decline in comps at its namesake banner and a 1 percent drop at Old Navy. On the other hand, the company’s Banana Republic stores reported a 14 percent same-store sales gain.

The teen sector largely beat Wall Street expectations for January. American Eagle reported a same-store sales increase of 17 percent, well above industry expectations. Aéropostale also surprised with a 5.4 percent comps gain after months of low-single-digit numbers through the holidays.


January Same-Store Sales
January
% Change
December % Change
November % Change
DEPARTMENT STORES
2007
2006
2006
2006
Bon-ton
6.4
0.9
-5.8
-10.5
Dillard’s
-3.0
3.0
-5.0
-3.0
Federated
8.6
1.0
4.4
8.5
Gottschalks
-1.0
0.3
0.6
-0.9
Kohl’s
8.7
2.0
3.0
3.7
Neiman-Marcus
11.3
4.1
7.3
2.9
Nordstrom
11.1
6.0
9.0
5.4
J.C. Penney
3.6
2.5
2.6
1.4
Saks Fifth Ave. Enterprises
11.4
3.7
11.1
7.2
Stage Stores
7.5
1.5
2.2
0.2
Average:
6.5
2.5
2.9
1.5
 
SPECIALTY CHAINS
Abercrombie & Fitch
-6.0
33.0
-1.0
-3.0
Aeropostale
5.4
12.3
1.7
1.0
American Eagle
17.0
11.3
13.0
14.0
Ann Taylor
-10.2
10.6
-5.3
-4.3
Banana Republic
14.0
-6.0
2.0
-1.0
Bath & Body Works
19.0
-2.0
5.0
16.0
Bebe
0.8
9.8
4.0
5.8
Buckle
7.8
3.0
3.6
4.2
Cache
10.0
0.0
4.0
8.0
Cato
-7.0
6.0
-6.0
-2.0
The Children’s Place
3.0
9.0
5.0
12.0
Chico’s FAS
-3.5
14.6
-2.0
-0.4
Christopher & Banks
-4.0
-3.0
-7.0
-8.0
Citi Trends
3.2
22.7
-0.1
1.8
Claire’s
9.0
9.0
0.0
0.0
Deb Shops
-3.8
11.6
-7.5
-9.5
Dress Barn
8.0
16.0
5.0
4.0
Gap (U.S. stores)
-6.0
3.0
-9.0
-7.0
Guess
NA
31.0
9.6
12.1
Gymboree
0.0
2.0
15.0
5.0
Hot Topic
-6.6
-0.7
-5.1
-4.3
Limited Brands (total apparel)
12.0
0.0
-7.0
6.0
Motheres Work
-6.0
3.9
-0.3
-1.0
New York & Company
2.3
0.6
3.2
-2.8
Old Navy
-1.0
0.0
-10.0
-10.0
Pacific Sunwear
-7.7
4.9
-3.2
-3.8
Rite Aid
4.5
0.9
2.6
2.5
United Retail
2.0
15.0
-2.0
3.0
Victoria’s Secret
7.0
3.0
10.0
14.0
Walgreen
10.8
7.4
7.9
16.2
Wet Seal
3.5
51.4
1.3
5.5
Wilsons
-20.0
-12.7
-23.1
-19.1
Zumiez
13.0
23.2
11.5
12.1
Average:
2.2
8.8
0.5
2.0
 
MASS MERCHANTS
BJ’s Wholesale Club
2.0
2.0
0.6
0.6
Costco
3.0
12.0
9.0
4.0
Ross Stores
2.0
9.0
2.0
0.0
Stein Mart
-1.9
-0.4
0.0
3.8
Target
5.1
5.2
4.1
5.9
TJX Cos.
4.0
5.0
6.0
3.0
Wal-mart (discount stores)
1.9
4.0
1.3
-0.5
Average:
2.3
5.3
3.3
2.4
Tally:
Up
33
41
30
28
Flat
1
3
2
2
Down
15
6
17
17
Total
49
50
49
47