Cold January Is a Hot One for Retailers

Investors bid up shares on generally solid same-store sales.
By Meredith Derby ,

Updated from 9:43 a.m. EST

Retailers' January same-store sales were surprisingly strong, with the Northeast's bitter cold sending shoppers in search of warm clothes. The performance pleased investors, who bid up the

Retail Holdrs

(RTH) - Get Report

basket by about 1.5%.

"Harsh winter weather invigorated and energized shoppers in the huge population centers of the northern U.S., helping sales of full-price winter outerwear and accessories," said Richard Hastings, retail economist at Bernard Sands. "January is no longer the throw-away, markdown, clear-'em-out month that it was a generation ago."

Wal-Mart

(WMT) - Get Report

reported a 5.7% rise in same-store sales, with total sales increasing 14.3% to $18.4 billion, surpassing its forecast.

The company estimated February same-store sales would rise by 3% to 5% and said its sees quarterly earnings at the high of its prior forecast of 63 cents to 65 cents a share. But the company said results could come in at 63 cents a share after a noncash adjustment related to a tax law change in Germany. The consensus earnings estimate is for 63 cents a share. Shares of the company were lately up 65 cents, or 1.2%, at $56.04.

Wal-Mart's main rival,

Target

(TGT) - Get Report

, said same-store sales (sometimes referred to as "comps") rose 5.1%, beating its own guidance for a 4.6% rise. The company also reported that total monthly sales were up 11.9% at $3.063 billion. Target shares were up 47 cents, or 1.2%, to $39.47.

Ulysses Yannas, an analyst at Buckman Buckman & Reid, said the two big discounters did better than expected, but noted that

Costco

(COST) - Get Report

is giving them a run for their money. The company said January same-store sales surged 13%, with total sales up 16% at $2.97 billion. Its shares were climbing 64 cents, or 1.7%, at $37.94.

"

Costco is doing much better than anyone thought they would. They seem to do well despite pressure from

Wal-Mart's Sam's Club," he said. Comps at Sam's Club were up 7.9%.

BJ's Wholesale Club

(BJ) - Get Report

said comparable club sales increased by 8.8%, in line with the company's expectation, aided by gasoline sales. Total January sales were up 14.4% at $475.8 million.

Citing the stronger-than-expected January sales, BJ's said it sees fourth-quarter earnings slightly above the high end of its previously announced range of 62 cents to 64 cents a share. The consensus is 64 cents a share. Shares of BJ's were up $1.94, or 8.9%, at $23.74.

Specialty retailers' results were all over the map, said Yannas, with several having better-than-expected comps in the teens, while a couple posted double-digit decreases.

Pacific Sunwear

(PSUN)

said same-store sales increased 12.4% and that total sales jumped 24.5% to $54.4 million in the period.

The company also said total fourth-quarter sales were up 23% at $326.3 million and that based on January's results, it raised its profit outlook to 42 cents a share from 41 cents a share. Consensus is 41 cents a share. Shares were up $1.26, or $5.5%, at $24.26.

Chico's FAS

(CHS) - Get Report

said comps rose 19.5%, with total sales up about 50% at $55.3 million. The company said fourth-quarter earnings should be in line with the analysts' consensus estimate of 27 cents to 28 cents a share. The company's shares were adding $1.10, or 2.9%, at $39.

Sharper Image

(SHRP)

posted a 21% surge in same-store sales with total January sales rising 40% to $47.3 million. The company cited strength in its proprietary and brand products.

Sharper Image also raised its fourth-quarter earnings guidance to $1.38 to $1.40 a share from a previous range of $1.34 to $1.38 a share. Fiscal-year earnings guidance was raised to $1.63 to $1.65 a share, from $1.57 to $1.61 a share. The company has now raised guidance twice recently. Consensus is for $1.38 a share in the fourth quarter and $1.61 a share for the year. Shares were rising $1.29, or 3.5%, at $38.30.

Abercrombie & Fitch

(ANF) - Get Report

had a rare month of positive same-store sales, with a 2% increase. The company had reported positive comps in only two of the last 32 months. Total sales increased 22% to $97.1 million.

The company said that due to stronger-than-expected January sales and its continued emphasis on margin improvement and expense controls, it now expects to exceed its previous fourth-quarter earnings guidance of 90 cents to 93 cents a share. Consensus is 92 cents a share. The company's stock was up $2.21, or 8.7%, at $27.75.

Gap

(GPS) - Get Report

had a 3% increase in comps and said total January sales increased 11% to $939 million.

The company expects to report fourth-quarter earnings of 36 cents to 37 cents a share, including certain costs related to debt repurchase during the quarter and its decision to exit Germany, which was also announced Thursday. Consensus is 34 cents a share. Shares were rising $1.40, or 7.4%, at $20.30.

Ann Taylor

(ANN)

said comparable-stores sales increased 3.7% while total sales increased 13.7% to $93.1 million.

The company raised its fourth-quarter earnings guidance to 63 cents to 65 cents a share, up from 54 cents to 56 cents a share, citing better gross margins on January sales. Full-year earnings are seen at $2.11 to $2.13 a share. Consensus is 56 cents a share in the quarter and $2.03 a share for the year.

For first-quarter 2004, Ann Taylor currently expects comparable-store sales in the mid single-digit positive range. Shares of the company were up 7 cents, or 0.2%, at $41.07.

Over at

bebe stores

(BEBE)

, same-store sales rose a weaker-than-expected 4.8%. Total sales were up 13.5% at $23.6 million. Shares were falling 23 cents, or 0.9%, at $26.85.

Hot Topic's

(HOTT)

results were also lower than expected, with same-store sales up 4.7%, compared with a 13.7% increase a year ago. Total sales increased 27% to $33 million. Shares of Hot Topic were down $1.37, or 4.5%, at $28.85.

Meanwhile,

Wet Seal

(WTSLA)

had a 21.4% decrease in January comps. Total sales were $23.6 million, down from the prior period's $28.7 million. The company's shares were lately off 30 cents, or 3.5%, at $8.20.

Pier 1 Imports

(PIR) - Get Report

reported a 2.9% drop in same-store sales for the month but said total sales increased 7% to $125.3 million. The company cited "extreme weather."

Pier 1 sees comps in the fourth quarter down 2% to 4%. Earnings in the quarter are seen at 52 cents to 56 cents a share, in line with the consensus of 54 cents a share, but off compared with the prior year's profit of 57 cents a share. Shares were up $1.26, or 6.3%, at $21.41.

Talbots

(TLB)

said January same-store sales dropped 11.8%, with total sales declining 5% to $105.4 million.

The company said it is "comfortable" with its previous guidance of 37 cents to 41 cents a share, compared with 48 cents a share a year ago. Consensus is 40 cents a share. Shares were up 42 cents, or 1.3%, at $32.71.

In the luxury space,

Nordstrom

(JWN) - Get Report

said January comps increased 8.7%, with total sales up 13.5% to $355.3 million. Shares were gaining 29 cents, or 0.7%, at $40.26.

Neiman Marcus

(NMGA)

had a 15.2% surge in comparable-store sales, with total January sales up 15.4% at $216 million.

The company said it sees a profit of $1.16 to $1.21 a share in the second quarter, including a gain from favorable settlements associated with previous state tax filings. Comparable-store sales for the third quarter are seen rising 8% to 10%. Shares were lately up 37 cents, or 0.7%, at $57.06.

Same-store sales at

Saks

(SKS)

increased 6.6% while total sales were up 7.8% at $347.6 million. Saks shares were up 26 cents, or 1.6%, at $17.08.

Among department stores,

Dillard's

(DDS) - Get Report

came in with better-than-expected same-store sales of 2% with a 2% increase in total sales to $478.9 million. Like Abercrombie, the company has struggled with negative same-store sales. Shares were up 51 cents, or 3.1%, at $17.08.

Sears

(S) - Get Report

said comparable domestic-store sales increased 4.6% and total January sales also rose 4.6% to $1.6 billion. The company cited strength in its home goods business. Sears shares were up $1.67, or 3.7%, at $46.27.

Yannas also noted that "finally, the department stores seem to be picking up," especially at the mid-level stores like

May

(MAY)

, which had a same-store sales increase of 5.3% with total sales up 9.2% at $715 million. Shares of May were adding 69 cents, or 2.1%, to $33.75.

J.C. Penney

(JCP) - Get Report

said same-store sales in January rose 6.4%, exceeding its expectations. Total sales in the period were $2.6 billion, compared to $2.07 billion in the prior-year period. The company cited the early sell-through of spring apparel. Shares were up 24 cents, or 0.9%, at $27.24.

Kohl's

(KSS) - Get Report

had a 0.3% increase in comps, with total sales increasing 14.5% to $536.8 million. Shares were climbing $1.71, or 3.8%, at $46.80.

Dollar General

(DG) - Get Report

had a 3.1% increase in January comps, with a 11.8% increase in total January sales at $480.2 million. The company's shares were lately up 19 cents, or 0.8%, at $22.72.

And comps at

Fred's

(FRED)

were up 4.1%. The company said total January sales rose 13% to $93.6 million. The company sees earnings of $1.03 to $1.10 for fiscal 2004, compared with the consensus estimate of 88 cents a share. Its stock was lately up 42 cents, or 1.6%, at $27.17.

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