Wal-Mart, Target Sales Surprise

Updated from 9:13 a.m. EST

Though a large number of retailers reported solid February same-store sales Thursday, many of the stocks showed little or nothing for it.

Lynn Mander, a portfolio manager at Bryn Mawr Trust Wealth Management, thinks the monthly sales information was already priced in, and said the stocks could be correcting after a postholiday run-up.

Typically, stock prices are higher going into spring after lagging during the holiday season when investors are usually concerned about how strong the holiday season will be, Mander said.

A broad measure of the reaction, S&P's retail index, was lately off 1.74 points, or 0.4%, at 397.75.

Of individual retailers, Wal-Mart ( WMT), the world's largest retailer by revenue, reported that same-store sales increased 6.2%, which was above its own estimate, and superior to a 2.6% increase in the same period last year. Net sales at increased 14% to $20.2 billion.

Same-store sales at the company's Sam's Club division increased 7.5%, while total sales in the unit were up 10.4% to $2.7 billion. International division sales jumped 22.2% to $3.9 billion.

Wal-Mart said it expects same-store sales in March to rise 4% to 6%. Shares of the company were lately up 24 cents, or 0.4%, at $60.60.

Target ( TGT) also beat expectations with a 7.5% increase in same-store sales. Total sales in the period increased 13% to $3.31 billion.

Of note, both Mervn's and Marshal Field's, divisions of Target, posted positive same-store sales; the units have largely been reporting negative results in the last three years. Mervyn's and Marshall Field's have "been a real cement block around Target's foot for quite a while," Mander said.

Shares of Target were up 36 cents, or 0.8%, at $43.95.

Rounding out the major discount stores, Costco ( COST) had reported on Wednesday that same-store sales increased 11%, while BJ's Wholesale Club ( BJ) had said that same-stores sales rose 7.9%. Shares of Costco were down 31 cents, or 0.8%, at $38, while BJ's shares were up just 5 cents, or 0.2%, at $25.46.

Mander noted that, in general, the same-store sales numbers benefited slightly because of the easy comparisons to last year, when a huge snow storm hit the Northeast over Presidents' Day weekend.

She also thinks that early tax refunds might have helped the month. "That's really where I think the retailers stand to benefit -- from some of the money coming back into the taxpayers' hands," Mander said. "Do they chose to go buy a new sweater from the Gap ( GPS) or do they go to Home Depot ( HD) and remodel their bathroom? That will be the wildcard."

Mander added: "We now have people buying for themselves whereas they had been buying for others during the holiday season."

In the specialty retail space, Sharper Image ( SHRP) had a 20% increase in same-store sales, while total sales skyrocketed 47% to $51.9 million, helped by a 63% increase in Internet sales. Shares of Sharper Image were up 27 cents, or 0.7%, at $36.83.

Another blowout was reported by upscale men's retailer JoS. A. Bank ( JOSB), which announced at 34.7% increase in same-store sales with total sales up 55.8% to $24 million. The stock was up $2.70, or 8%, at $36.65 lately.

Pier 1 Imports ( PIR) reported a 3.3% increase in February same-store sales with an 11.4% increase in total sales to $129.9 million.

The company also reaffirmed fourth-quarter earnings at 52 cents to 56 cents a share, which is in line with analysts' consensus for 54 cents a share. While the company said sales in the quarter increased 6.6% to $555.3 million, overall same-store sales in the period dropped 2.2%.

The company sees March same-store sales in the 2% to 4% range. Shares of Pier 1 were up $1.19, or 5%, at $24.94.

Gap said February same-store sales increased 12% while total sales in the period increased 13% to $925 million. Shares were rising 36 cents, or 1.7%, at $21.43.

Bebe's ( BEBE) same-store sales jumped 24.2%, while total sales in the period increased 34% to $28 million. The stock was recently gaining $1.81, or 6.2%, at $30.83.

Abercrombie & Fitch ( ANF) had a 1% rise in February same-store sales, its second month of positive results in a row after 33 months of generally lackluster performance. Total sales in the period rose 21% to $120.6 million.

The company backed its previously raised first-quarter EPS guidance to 27 cents a share, which matches the Wall Street consensus. Shares were down $1.50, or 4.7%, at $30.59.

Ann Taylor ( ANN) reported a 15.3% increase in February same-store sales on a 26.7% jump in total sales to $103 million.

The company also increased its fourth-quarter profit guidance to 47 cents to 49 cents a share with full-year guidance now $2.47 to $2.57 a share. Wall Street's consensus is 46 cents a share and $2.50 a share in the quarter and year, respectively. Nevertheless, shares were losing 43 cents, or 1%, at $44.62.

Chico's FAS ( CHS) had reported Wednesday that same-stores sales in the period increased 28%, while total sales rose 62% to $67.2 million. Shares were up $1.14, or 2.6%, at $45.34.

High-end retailer Nordstrom ( JWN) said same-store sales increased 8.8%, in line with analysts' estimates, while total sales for the company rose 11.8% to $385.8 million.

Nordstrom's results trail those of both Saks ( SKS) and Neiman-Marcus' ( NMGa). The companies Wednesday reported increases of 14.1% and 24.4%, respectively.

Shares of Nordstrom were up 13 cents, or 0.3%, at $39.69; shares of Neiman-Marcus were up $2.35, or 4.1%, at $59.34; and Saks' shares were up 3 cents, or 0.2%, at $17.42.

Department store chain J.C. Penney ( JCP) posted an impressive 12.1% increase in same-store sales, because the company now considers its recently sold-off Eckerd drugstore chain a discontinued operation.

The company currently expects March sales for both comparable department stores and catalog/Internet to be up in the low single digits. JC Penney shares were up just 8 cents, or 0.2%, at $33.09.

Same-store sales at Sears ( S) rose 1.1%, and the company reported a 0.5% decrease in total sales to $1.7 billion.

"Sears was a bit weak," said Mander. "That company has been hard to read. Their retail operation has been floundering for a while. They still have some challenges."

Shares of the company were down 99 cents, or 2.1%, at $47.36.

Dillard's ( DDS) had a 2% rise in monthly same-store sales while total sales also increased 2% to $621 million. Shares were down 7 cents, or 0.4%, at $17.96.

Kohl's ( KSS) had a 6.6% increase in same-store sales and net sales rose 21.8% to $592.2 million. The stock was up $1.22, or 2.4%, at $52.14.

Federated Department Stores ( FD) had a 9% increase in same-store sales while total sales rose 8.8% to $1.1 billion.

The company also revised its first-quarter same-store sales guidance to 4.5% to 6%. Consequently, Federated lifted its first-quarter earnings guidance to 35 cents 40 cents a share from its previous forecast of 24 cents a share, or flat with the prior year.

Federated also raised its annual earnings guidance for 2004 to $3.80 to $3.90 a share, up from its initial guidance of $3.70 to $3.80 a share. The stock was up 42 cents, or 0.8%, at $54.10.

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