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Retailers Report Sales Declines in February

The Associated Press

NEW YORK -- Tighter inventory control and milder weather helped retailers in February as business at many merchants was not as bad as in January. Wal-Mart's (WMT Quote) gains far outpaced expectations -- but many stores, especially at the higher end, still struggled.

The month showed a widening rift between moderately priced stores and luxury chains like Saks (SKS Quote). In the results released Thursday, mall-based clothing chains including Wet Seal (WTSLA Quote), Stage Stores Inc. and American Eagle Outfitters (AEG Quote) still saw sales slump, but the declines weren't as steep as Wall Street expected. At teen retailer The Buckle Inc., the same-store gain was more than double what Wall Street expected.

Same-store sales are sales at stores open at least a year and are a key measure of a retailer's health.

Nevertheless, analysts were quick to say that February's figures are unlikely to mark the beginning of a recovery. Consumers are still grappling with massive job cuts, tight credit and plummeting stock portfolios. The fear is that the economy could deteriorate even more as more people lose their jobs and are forced to slash spending even further.

The retail sales reports came as the Labor Department said that the number of new jobless claims and the total number of people receiving unemployment benefits both dropped unexpectedly last week -- though they remain high. In fact, economists surveyed by Thomson/IFR expect data out Friday to show that unemployment rose to 7.9% in February from 7.6% in January as companies kept slashing jobs.

"It's still ugly, but it's dressed up a little bit," said Ken Perkins, president of research company RetailMetrics LLC, referring to the February sales figures. "The macro headwinds outweigh fashion, newness and better weather and will continue to make it very difficult for retailers through the first half of the year."

February's figures are expected to mark the industry's fifth straight month of overall same-store sales declines.

Wal-Mart Stores Inc., though, posted much stronger results than analysts expected, saying its February same-store sales rose 5.1%. The results exclude fuel sales. Analysts surveyed by Thomson Reuters, on average, expected a rise of 2.4%.

Groceries and health products remained the best sellers as shoppers turned to the world's largest retailer for necessities. The company also did well with entertainment products and housewares as more families entertain and cook at home.

Rival Target's (TGT Quote) same-store sales declined 4.1%, less than the 4.8% drop that Wall Street expected.

TJX Cos., which sells discounted name-brand merchandise, said sales were flat from a year ago -- better than the 1.8% drop expected.

"We are taking a very conservative approach to managing the business, buying very sharply and maintaining lean, fast-turning inventories," Chief Executive and President Carol Meyrowitz said in a statement.

Among department stores, Macy's Inc.'s same-store sales fell 8.5%, deeper than the 7.3% decline that Wall Street expected. J.C. Penney Co. Inc.'s 8.8% decline was less than the 12.9% drop expected.

Luxury stores have been the industry's worst performers, scrambling to cut inventories to react to plummeting customer demand for $5,000 handbags and $3,000 dresses. Saks Inc., which operates Saks Fifth Avenue, suffered a 26% declines, deeper than the 20.5% drop expected by Wall Street. And Neiman Marcus Group Inc. said that same-store sales in the segment that includes Neiman Marcus Stores and Bergdorf Goodman fell 24.2%.

Nordstrom Inc. posted a 15.4% drop in same-store sales, deeper than the 14.4% decline expected.

Limited Brands Inc., which operates Victoria's Secret and Bath and Body Works, posted a decline of 7%. Analysts expected a drop of 7.1%. Stage Stores said same-store sales fell 8.6%, less than the 9.3% drop analysts expected.

Teen retailer American Eagle Outfitters Inc. posted a 7% decline, less than the 13.4% drop forecast by Wall Street. The Wet Seal Inc. posted a 6.6% decline, less than the 12% drop expected by analysts.

But The Buckle Inc. posted a 21% increase in February, far above the 9% gain expected. And Hot Topic Inc. reported Wednesday that its same-store sales rose 10.8%, more than double what analysts predicted, as teens snapped up accessories.