ANALYSTS: DON’T BANK TOO MUCH ON STRONG JAN. RETAIL RESULTS

Byline: Diane E. Picard / With contributions from Alexandra Zissu

NEW YORK — Santa was stingy in December, but retailers rebounded in January. Sort of.
Retail analysts warned that the strong results should not be taken at face value since they were driven by factors that ranged from heavy clearances to a week-long sales-tax abatement in New York State to the success of the Green Bay Packers.
The Super Bowl champs were credited with helping to drive customers into the Wisconsin stores of Kohl’s Corp. and produce a 29.5 percent same-store sales increase for the month.
Other retailers logging high comps include Federated Department Stores, with a 9.4 percent gain, and Saks Holdings Inc., with a 14.3 percent rise.
Bon-Ton Stores’ same-store sales were up 19.4 percent. Proffitts Inc. total company comps were up 12 percent, with the Younkers’ division up 19 percent and Proffitts units up 10 percent.
Further clouding the picture, analysts said, the January results appear strong for many chains due to weak comparisons to the prior year.
January volume results are the least significant of the retail calendar, since the month accounts for only 6.6 percent of sales for the whole year, according to Tom Tashjian, a retail analyst at Montgomery Securities.
“Its hard to comment intelligently about January,” said Robert F. Buchanan, a retail analyst at NatWest Securities. “Its largely a clearance-driven month.”
Jay J. Meltzer, managing director at LJR/Redbook Research, said the robust tone of business during the month was the result of a well-balanced economy, high levels of consumer confidence, benign winter weather and, for some, the one-week holiday from the New York sales tax.
“Clearances should continue to dominate sales activity for several more weeks, as old stocks are moved out and fresh early spring goods arrive,” Meltzer said.
“You have to remember the significant amount of heavy winter merchandise that the stores were left with following Christmas,” said Peter N. Schaeffer, a retail analyst at Dillon Read & Co. “Additional markdowns were needed to move these goods off the shelves.”
Retailers are still faced with the question of how quarterly earnings will be hurt by the unsold winter goods and the markdowns needed to clear inventories, he said, adding, “Many retailers’ earnings will take a haircut.” Nonetheless, retailers were happy for any improvement over the holiday season they could get.
“Our January sales were particularly strong, in part because our New York retail operations benefited from the week-long sales tax exemption,” said Allen Questrom, chairman and chief executive officer of Federated Department Stores, in a statement.
He estimated that about half of January’s comp-store increase could be attributed to New York’s elimination of the sales tax on most clothing and footwear under $500 for one week. Mild winter weather through large sections of the country also helped boost January results, Questrom said.
“The strong sales trend we experienced during the holiday season continued into January,” stated Philip B. Miller, chairman and chief executive officer of Saks Fifth Avenue. “We experienced strong performance in the fourth quarter in all store formats, which posted a 9.2 percent increase in same-store sales.”
Dayton Hudson Corp. total company same-store sales were up 5.5 percent, led by a 6.7 percent comp gain at Target. Mervyn’s comps were up 0.4 percent, while the department-store business logged a 4.1 percent gain.
A company spokeswoman noted inventories at all stores are “looking good,” adding that strong categories at Target included children’s apparel.
Mervyn’s performance was aided by boys’ and girls’ apparel, men’s wear and women’s career wear. At the department stores, women’s designer and better sportswear fueled sales.
Sears, Roebuck & Co.’s same-store sales rose 5.8 percent.
“Sears’ strong sales momentum continued in January,” said Arthur C. Martinez, chairman and ceo. “Our full-line stores again generated double-digit increases in soft lines, including women’s ready-to-wear, children’s apparel, shoes, accessories, cosmetics and fine jewelry.”
At Mercantile Stores Co., same-store sales gained 11.3 percent, while comp-store sales at Neiman Marcus Group rose 8.8 percent.
Gottschalks comps, which were up 4.1 percent, reflected “strength in almost every division, especially men’s children’s, cosmetics, women’s sportswear, intimate apparel, outerwear and dresses,” said Joe Levy, chairman and ceo.
At Carson Pirie Scott & Co., same-store sales were up 5.6 percent. Stanton J. Bluestone, chairman and ceo, said results were above expectations, considering the adverse weather conditions. Strongest businesses were women’s sportswear, children’s and men’s.
J.C. Penney’s same-store sales were up 13 percent. A spokesman noted that children’s apparel was the strongest seller, followed by women’s career, outerwear, special sizes, lingerie and sleepwear.
He also noted that since Penney’s clears its inventory during January, most of the sales for the month came from clearance merchandise.
Dillard Department Stores reported a 5 percent comp-store increase.
Kmart comps rose 7.9 percent with strong performances from men’s and children’s apparel, intimate apparel, fashion accessories and cosmetics.
Wal-Mart Stores’ comp sales were ahead 3.9 percent.
At specialty chains, Ann Taylor Stores same-store sales inched up 2.5 percent. In announcing the sales gain, Ann Taylor said it plans to close its nine Ann Taylor Studio stand-alone shoe stores during 1997 and will take a charge of about $1.9 million, or 8 cents a share, in the fourth quarter.
“January’s business was driven by our traditional semiannual sales event,” said Arnold B. Zetcher, Talbots’ president and ceo. Talbots’ same-store sales were up 7.8 percent.
The Limited’s same-store sales were up 17 percent. However, comps at Express were down 5 percent. Inventories are significantly below last year’s, the company said in a conference call.
A Limited spokesman said the amount of fall clearance merchandise exceeded expectations and margins were typically low. Lerner’s comps were up 31 percent, Lane Bryant’s up 21 percent, Limited Stores up 21 percent and Henri Bendel up 1 percent.
Intimate Brands’ comps moved ahead 15 percent overall, with a 17 percent gain at Victoria’s Secret stores and a 10 percent gain at Bath & Body Works.
At Gap, same-store sales were up 8 percent.
Catherine’s Stores’ comps were flat, and the company said it is realigning its merchandising organization.
United Retail Group’s same-store sales were up 6 percent. Mother’s Work maternity stores’ comps rose 4.7 percent, Episode Stores jumped 15.9 percent. and Cato Corp. comps were up 16 percent.
Gymboree comps were off 4 percent, and Chicos FAS comps declined 6.9 percent.
Discounter TJX Cos. showed a 9 percent increase, while Filene’s had a 24 percent rise.
Regional discounters showed gains as well. Ames Department Stores comps rose 10 percent; Shopko Stores had a 17.1 percent gain; Family Bargain, a 5.9 percent increase, and Dollar General moved ahead 13.8 percent.

load comments
blog comments powered by Disqus