Big Chill Warms Retailers - TheStreet

Big Chill Warms Retailers

January sales are solid as cold weather helped move seasonal merchandise.
Author:
Publish date:

Updated from 9:15 a.m. EST

Retailers reported solid January results Thursday as falling temperatures during the month helped heat up sales.

Of the 55 retailers tracked by Thomson Financial, 63% beat Wall Street's expectation for growth in same-store sales, or sales at stores open at least a year. Thomson noted that retailers are attributing their success to cold weather that helped drive out seasonal merchandise.

Thomson said 33% of the retailers missed expectations for same-store sales, or comps, and 4% had matched Wall Street's forecast.

"You've got to be happy with these numbers this morning," says Ken Perkins, president of the research firm Retail Metrics. "It's the biggest upset we've seen since September."

Thomson's comp sale index registered a 3.9% increase, beating its earlier estimate for 3.1% growth. Excluding results from

Wal-Mart

(WMT) - Get Report

, the index jumped to a 5.2% comp increase, a full percentage point above Wall Street's 4.2% projection.

Perkins said department stores were a big factor in the positive numbers. The sector posted a 6.6% comp sales increase, beating analysts' estimate of 4.2%.

Meanwhile, the cold snap came too late to help women's apparel sellers, which were among the weaker performers.

Howard Davidowitz, chairman of New York-based retail consulting and investment banking firm Davidowitz & Associates, warns that while cold weather may have helped boost sales, there could be some negative earnings surprises in the apparel sector.

"The cold weather stuff sold at rock-bottom prices, but the spring merchandise didn't sell, so the mix of merchandise is going to push the margins down on apparel," he says.

The world's biggest retailer, Wal-Mart, confirmed that its same-store sales increased 2.2%, topping its own forecast of 1% to 2% growth, and beating Wall Street's estimate of a 1.8% rise.

Wal-Mart said sales for the fourth quarter were strong in entertainment, grocery and pharmacy. While overall sales continued to be soft in apparel and home, the company said men's apparel had above-average comps for the January period.

"Colder temperatures throughout the United States drove sales of cold weather-related items," Eduardo Castro-Wright, Wal-Mart U.S. president and CEO, said in a statement.

Looking ahead, the company said it expects comp sales growth for February to be between 1% and 2%.

Rival

Target

(TGT) - Get Report

said same-store sales climbed 5.1%, which the company said was in line with its expectations. Wall Street expected 4.6% growth. Total sales jumped 37% to $4.9 billion, boosted by an extra week in the period. For the February period, the company forecast 4% to 6% same-store sales growth.

Elsewhere,

Gap

(GPS) - Get Report

had a rare upside surprise, posting flat same-store sales and raising its full-year earnings forecast. Analysts expected the struggling specialty clothing seller to report a 7.7% drop in same-store sales.

Gap's results were helped by a big boost from the company's Banana Republic division, which recorded a 14% same-store sales rise. At Old Navy, same-store sales fell 1%, while Gap same-stores sales slid 6%.

The company, citing a better-than-expected clearance of holiday merchandise and a lower tax rate, said it now expects fiscal-year earnings of 89 cents to 91 cents a share. Previously, the company forecast earnings of 83 cents to 87 cents a share; analysts forecast a profit of 19 cents a share. Shares of Gap were up nearly 3%.

Limited Brands'

(LTD)

same-store sales jumped 11%, beating analysts' average estimate of 7.8%. The operator of stores such as Victoria's Secret and Bath & Body Works said that total sales for the five-week period rose to $1.06 billion from $813.4 million in the four-week period a year earlier.

Among department stores,

Federated

(FD)

said same-store sales rose 8.6%, well ahead of Wall Street's expectation of 4.6%. Total sales for the month ended Feb. 3 were $1.78 billion, up 19% over a year earlier.

Kohl's

(KSS) - Get Report

said comp sales increased 8.7%, besting Wall Street's expectation of 5.5% growth. Sales for the five-week period increased 46.6%.

"January's sales results were driven by strong customer demand for cold-weather merchandise as well as redemptions of gift cards," Larry Montgomery, Kohl's chairman and CEO, said in a statement.

High-end department store

Nordstrom

(JWN) - Get Report

was among the top performers for January, posting comp sales growth of 11.1% and blowing by Wall Street's estimate of 5.9%.

For the five-week period ended Feb. 3, Nordstrom reported total sales of $610.1 million, boosted by an extra week. For the four-week period a year earlier, sales were $431.2 million.

Saks

(SKS)

said comp sales rose 11.4%, beating Wall Street's 7.7% forecast. Total sales for the month rose 13.2% to $182.8 million.

The company said some of the strongest-selling goods included women's modern collections and designer apparel, shoes, handbags, fine jewelry, accessories and men's sportswear and accessories.

J.C. Penney

(JCP) - Get Report

said comp sales rose 3.6%, squeaking analysts' expectation of a 3.5% rise.

The company said the best sales performances for the month were in the apparel areas, reflecting favorable sell through of spring merchandise as well as strong demand for cold weather apparel and accessories.

For February, J.C. Penney said same-store sales at its department stores are expected to increase in the low-single digits, and direct sales are expected to decrease slightly compared with last year.

Membership warehouse operator

Costco

(COST) - Get Report

said comp sales were up 2%, missing Wall Street's expectation for 3% growth. January sales totaled $5.6 billion, up 7% from a year ago.

BJ's Wholesale Club

(BJ) - Get Report

said comp sales 3.5%, including a contribution from sales of gasoline of about 0.3%, beating Wall Street's estimate for a 2.1% rise. Total sales increased 8.5% to $724.2 million.

In the teen space,

Abercrombie & Fitch

(ANF) - Get Report

posted a 6% decline in same-store sales, worse than Wall Street's forecast for a 1.9% decline. Total sales jumped 37% to $252.3 million, also helped by the extra week.

Elsewhere,

Aeropostale

(ARO)

reported a 5.4% same-store sales rise, exceeding Wall Street's target of 2.7% growth. The company also boosted its fourth-quarter earnings forecast to 98 cents to 99 cents a share, before items, from an earlier projection of 91 cents to 93 cents.

Late Wednesday, fellow teen chain

American Eagle Outfitters

(AEOS)

posted a 17% jump in comps, surging past estimates for 10.9% growth.

Specialty retailer

Gymboree

(GYMB)

racked up the biggest miss of the month, posting a flat comp for January, while Wall Street was looking for a 9.9% increase. The company said net sales for the period increase 24% over last year to $62.5 million. Shares were trading down 13%.

AnnTaylor Stores

(ANN)

also took a beating, posting a 10.2% decrease in same-store sales and forecasting full-year earnings below Wall Street's target. Wall Street was looking for a 5.4% January same-store sales drop.

"The soft January comp at Ann Taylor was directly related to not offering the 40% off promotional event we ran last January due to this year's healthy inventory position," Kay Krill, president and CEO, said in a statement.

The company said it expects fiscal-year earnings of $1.95 to $1.98 a share. Wall Street is looking for earnings of $2.01 a share.

Specialty retailer

Chico's FAS

(CHS) - Get Report

said comp store sales for company-owned stores decreased 3.5%, steeper than Wall Street's forecast for a 1.5% decline. Sales increased 37.2% to $125.8 million.