Consumers warmed up to moderating weather patterns in January and pulled out their Christmas gift cards en masse to help retailers post a solid month and the perfect finish to the retail year. As in years past, gift card redemptions help push the holiday season into the last month of the retail calendar, but the warmest January in 112 years, according to Weather Trends International, and Consumer Confidence figures that hit a 30 month high, according to The Conference Board Consumer Research Center, also helped drive consumers into the mall to push comparable store sales up in mid-single-digits for the month.
According to a survey of 65 chain stores conducted by the International Council of Shopping Centers, comp store sales rose 5.1% for the month. Retail Metrics LLC, a Massachusetts-based market research firm, said that retailers posted a 4.8% increase for the period. Both numbers easily beat estimates ranging from 3.6% to 4.1% increases for the month.
The Consumer Confidence Index rose to 106.3 for the month, up from 103.8 in December, representing the highest level since June 2002. But the excitement may be short-lived as both analysts and the CCI indicate less enthusiasm for the long-term prospects for the retail landscape. The two components of the CCI provided conflicting outlooks for the business. The Present Situation Index jumped to 128.4 in January from 120.7 in December, but the Expectations Index, which measures consumers confidence in the long-term outlook for the country, dipped to 91.5 from 92.6 in December.
But the sales results for the month put a nice period at the end of the year for retailers. According to the ICSC, full year comps were up 3.9% for the year, a notch above the 3.8% increase for fiscal 2004, while the month clearly lifted the quarter above the trend for November (+3.8%) and December (+3.5%).
Athletic footwear companies are also starting to realize the upside to holiday gift cards and are placing more emphasize on the month for launch product.
Nike pushed out the Air Max 360 at $160 a pop in January, a number that appeared to turn away very few targeted consumers. Sports Executive Weekly is estimating that the shoe pushed in the low-teens the first week out.
Foot Locker Inc. got a boost for the month and the quarter from additional marquee product and an increased promotional cadence as continued strength in the Footaction and Champs businesses bolstered a strengthening U.S. Foot Locker group business, which includes Foot Locker, Lady Foot Locker, and Kids Foot Locker. Footaction was reportedly up in double-digits, while the Foot Locker business increased in mid-singles for the quarter. The Direct business, which includes Eastbay and footlocker.com, was said to have a “very solid” increase for the period. The Foot Locker Europe business kept the total comp gains in check, as issues in Western Europe contributed to a mid-single-digit decline for the region.
Total net sales for Foot Locker, Inc. inched up 1.8% to $1.56 billion for the fourth quarter, compared to $1.54 billion in the comparable period last year. Excluding fluctuations in FX rates, total sales improved 3.6% for the quarter. Comp store sales increased 3.9% for the quarter. For the year, total net sales increased 5.5% to $5.65 billion, up from $5.36 billion in the prior year. Currency-neutral sales increased 5.5% for the year, while comp store sales increased 2.7%.
Company Chairman and CEO Matt Serra said that the January sales increases in the U.S. business partially reflected “a more promotional posture during the January clearance period” than initially expected. He said that “merchandise is better positioned for 2006” and within their “inventory aging standard.”
Foot Lockers Q4 results include pre-tax income of $5 million, or two cents per share, primarily reflecting collections from its insurance companies related to recovery of losses sustained from the gulf hurricanes in the third quarter. The company expects to see a benefit of approximately $6 to $9 million, or 4 to 6 cents per share, to the net income line for the fourth quarter, resulting from a reduction of its income tax valuation allowance. FL currently expects EPS from continuing operations in Q4 to be in the range of 60 to 63 cents.
Hibbett Sporting Goods saw positive momentum in equipment, footwear, and apparel in the fourth quarter help push comps up 2.5% for the period. Total net sales increased 12.8% to $120.8 million for the quarter, compared with $107.1 million for the year-ago period. HIBB opened a net of 23 new stores during the quarter.
For the year, Hibbett saw comp store sales increase 5.6% versus 2004, while net sales increased 16.6% to $440.3 million, compared with $377.5 million for the prior year. HIBB opened a net of 67 new stores, bringing the total to 549 stores in 22 states at year-end. Hibbett expects to open a net of about 80 to 85 new stores in fiscal 2007.
ICSC said that comp sales at Footwear Stores rose 5.2% for January, pushed higher by low-teens increases at Shoe Carnival and DSW.
Shoe Carnival said that mens and womens athletic footwear sales “picked up nicely” in January, comping up in the low-teens for the period, thanks to the onset of warmer weather. But the womens dress and casual business continued to be the primary driver, increasing in the high-teens for the month. The mens business was up in high-singles and the childrens business, which includes kids athletics, was also up in high-single-digits.
Total comps were up 11.8% for January at Shoe Carnival, with footwear comping up 12.2% for the month and accessories posting a mid-single-digit gain for the period. Total net sales were up 14.1% to $39.0 million for the month from sales of $34.2 million in the year-ago period, resulting in a 13.7% net sales increase for the fourth quarter.
Shoe Carnival total net sales were $163.6 million in Q4, compared to $143.9 million in Q4 last year. Comps were up 11.7% for the fourth quarter ended January 29. Comp store sales were up 6.9% for the year, while net sales increased 11.1% to $655.6 million.
Based on the strong Q4 sales performance, SCVL now expects fourth quarter diluted EPS in the range of 20 cents to 22 cents per share, including a three cent charge for store closing costs, resulting in diluted earnings per share in the $1.38 to $1.40 per share range for the full year, up from 96 cents for 2004.
DSW Inc. saw comps increase 11.6% for January, which, combined with new store openings, pushed total net sales for the month up 23.0% to $71.6 million from $58.2 million last year. Fourth quarter total net sales increased 22.5% to $283.8 million from $231.7 million last year, while comparable store sales increased 11.3% for the period. DSW comparable store sales increased 5.4% for the year ended January 28, while total net sales for the year increased 19.0% to $1.14 billion from $961.1 million last year.
Shoe Pavilion saw its first $100 million year, helped by a strong fourth quarter that had net sales increasing 18.9% to $29.5 million for the period ended December 31, compared to net sales of $24.8 million for the year-ago period. Comparable store sales increased 5.5% for the quarter on top of a 14.7% increase in Q4 last year. Total net sales increased 19.5% to $102.5 million for the full year, compared to net sales of $85.8 million for the prior year. Comps improved 6.9% for the year.
Teen retailers saw the biggest gain for January, reflecting the demographics of a key recipient group for gift cards. Total comps improved 15.7% for the teen segment, the strongest since June 2005 (+17.0%).
Zumiez Inc. net sales for January increased 46.3% to $12.9 million, compared to $8.8 million for the same month last year. The company's comparable store sales increased 23.2% for the month, on top of a comparable store sales increase of 17.2% in the year-ago period. Weekly comps for the month of January were up 22.6%, 16.6%, 25%, and 29.4%, respectively. Sales growth for the month was driven by new stores, increased comparable store transactions, and increased average unit retail. All departments posted positive comp results with mens the strongest contributor.
Zumiez ended the year with 174 stores in operation, achieving their goal of 35 new stores for 2005 and on track for the planned 42 openings in 2006.
Pacific Sunwear of California saw sales in January jump 15.1% to $75.3 million, from $65.4 million during the same month last year. Total company comp store sales increased 4.9% for the period, with PacSun same-store sales increasing 5.1% and d.e.m.o. comps increasing 3.2% for the month.
Total PSUN sales for the fourth quarter were $425.0 million, an increase of 11.9% over total sales of $379.7 million for the same period last year. Pacific Sunwear total company same-store sales increased 2.2% in Q4, with PacSun same store sales up 2.4% and d.e.m.o. same store sales up 0.5%.
Total sales for the year were $1.39 billion, an increase of 13.1% over total sales of $1.23 billion for the same period last year. Total company same store sales increased 3.2% during the same twelve month period, with PacSun same store sales up 3.5% and d.e.m.o. same store sales up 1.1%.
At PacSun, guys comped up in the low single digits, driven by denim, t-shirts, track jackets and fleece, and accessories. Girls comped up low singles as well, with strength in knit tops, sweaters, long-sleeved Ts, outerwear, and accessories, but with difficulties in fleece and sneakers. Basic denim continued to perform well on the girls side, but any strength was “more than offset” by weakness in fashion denim.
At the d.e.m.o. concept, sales were driven by girls, which was up in the mid-teens, but were offset by guys, which was down mid-singles. Knit-tops, capris, denim, fleece, shoes, and accessories all drove the girls business, while polo tees, basic denim, and footwear were strong for guys, but were offset by difficulties in wovens, fleece, and accessories.
Based on January sales results, the company has reiterated its previous fourth quarter guidance of 62 cents to 63 cents per diluted share, representing a 15% to 17% increase over the 54 cents per diluted share that the company earned in the fourth quarter last year.
The Buckle saw January sales increase 8.7% to $28.0 million from $25.8 million during the same month last year. Comparable-store sales, for stores open at least one year, for the month rose 3.0% on top of an 8.6% gain for the prior year month.
Net sales year-to-date increased 6.4% to $501.1 million from sales of $470.9 million a year ago. Comparable-store sales year-to-date increased 1.4% after a 6.3% gain last year. Net sales for the fourth quarter increased 5.3% to $153.4 million compared to net sales of $145.6 million for the fourth quarter of fiscal 2004; but, comparable store net sales were down 0.1% for the quarter compared with last year.
The Luxury Retail segment moderated a bit in January, posting a 5.0% increase for the period, led by a 6.0% increase at Nordstrom. Department Stores as a whole were only up 2.7% for the period, led by a 4.0% increase at Saks.
ICSCs chief economist and director of research, Michael Niemira, said he anticipates a same-store sales rise of 3.0% to 3.5% for February.
