Better-than-expected retail results gave the market a bit of a shot in the arm last week as reports had February monthly comps either just above flat or just below. Retail Metrics reported comparable store sales increased 0.7% for the month, while a preliminary tally of 35 retail-chain stores compiled by the International Council of Shopping Centers showed a 0.1% year-over-year decline.
In both cases, the good news is that the results marked a continued improvement from the low point in November 2008. Indeed, by both measures, retailers posted results that were ahead of the 1% to 2% same-store sales declines that had been expected with many individual retailers besting analysts expectations.
However, within the good news lies the picture of a consumer continuing to stretch every dollar. The only channel to post comps growth on a consolidated basis, according to the ICSC data, was discounters, including the likes of Wal-Mart, Target and TJX. TJX was flat for the month, while Target was down, but Wal-Mart was the true driver of the gains here and for the market as a whole. Excluding Wal-Mart, the ICSC estimated that February comps declined 4.3% for the market as a whole.
At Wal-Mart, comparable store sales increased 5.0% for the month, with the company noting an acceleration in traffic and increased average ticket as drivers of the growth. The company said grocery, health and wellness and entertainment drove comps, with home and hardlines also positive. The suggestion is that consumers are buying more for the home, especially in food and food prep, rather than eating out.
“We believe falling gas prices significantly boosted household disposable income in February and therefore allowed for both more trips and more spending towards discretionary categories,” said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc.
Though Wal-Mart was strong for the month, all other channels tracked by ICSC posted declines. Wholesale clubs came closest to growth-down 0.9%- but, unlike most other channels, were hurt by the low prices of gas. Excluding fuel, comps for the wholesale clubs channel increased 5.0% for the month.
Department stores continued to suffer through February with comps down 9.8% for the month, according to the ICSC, though it was luxury stores that posted the steepest declines. As a whole, Luxury retail comps declined 19.2% for the month. Aside from drug stores, Lux was the only channel to see a worse year-over-year decline in February 2009 than in January 2009.
The apparel specialty channel posted a 7.9% comps decline for the month, but improved from a 14.0% decline in January. Notably, Abercrombie & Fitch posted a 30.0% drop in February comps. That decline contributed to a 12.1% decrease at teen retailers, according to the ICSC data.
Also contributing to the better-than-expected results was a warm, dry month coinciding with many retailers making an early conversion to spring floor sets to try to drive sales. Overall, the month trended the warmest in four years, according to data gathered by Weather Trends International. February also saw the least snow in 7 years and was the driest in 13 years. All regions except the Southeast had significantly less snowfall, which is a big plus for increased store traffic.
Generally, leaner inventories also have helped the industry with reduced discounting. Echoing this sentiment (which other retailers have shared) was Kevin Mansell, Kohl's president and CEO, who noted about his company that “February's sales results exceeded our expectations as regular price selling offset significantly lower levels of clearance sales.”
Looking ahead to March, ICSC anticipates that sales will be flat to down 1% from the results posted for March 2008.
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Zumiez reported a 13.4% drop in comps for the month on top of a 2.6% decline for the year-ago month. Total sales were just above flat at $23.1 million. Comps were down in the low- or mid-teens for each week of the four-week month.
On a pre-recorded conference call, management attributed the comps declines to a decrease in transactions that was somewhat offset by increased average unit retail. Footwear comped positive for the month, but that gain was offset by comp declines in mens and juniors apparel, accessories, hardgoods and boys apparel.
“Our comping stores west of Texas, which comped down in the high negative teen range, continue to post comp store losses lower than our stores in the South, Midwest, and Northeast,” CFO Trevor Lang commented on the call.
Zumiez ended the month with 345 stores in operation, 288 of which were included in the comp base.
The Buckle continued to post impressive comparable store gains as it seemingly takes business from every corner of the mall. Comparable store sales increased 21.0% for the month on top of a 24.3% jump in the year-ago month. Net sales increased 27.6% for fiscal February to $63.3 million from $49.6 million last year.
