Resolute shoppers braved winter storms throughout much of the country in January, trudging through extraordinarily snowy conditions to stock up on discounted winter clothing while making the most of post-holiday sales.
The International Council of Shopping Centers, which tracks 32 retail chains, excluding Wal-Mart, said consolidated January comps improved 4.8% over the year-ago period, the strongest monthly gain since November’s 5.4% year-over-year gain. In December, the ICSC forecast 2.5% growth for January. For the fiscal year through January, the ICSC reported sales grew 3.5% — the strongest retail performance since 2006 (+4.8%).
In chains tracked by ICSC, apparel-specialty retailers led the way in January, posting a hefty 7.3% gain for the month on surging demand for winter weather apparel. Retailers didn’t completely evade the effects of January’s winter storms as many chains with significant store base concentrations in the Northeast and South the hardest hit regions – said store traffic was down due to the weather. JC Penny (-1.2%), for example, missed estimates due to lower store traffic and fewer clearance sales while Target (+1.7%) pointed to missed sales opportunities in the Northeast and South as the primary catalyst to worse-than-expected comps. But overall, there was convincing evidence of a general strengthening of the consumer market as many retailers held fewer clearance sales than last year but still recorded strong sales. In terms of sales volume, January is the least important month to the fourth quarter and is historically a clearance-heavy month when retailers are focused on exiting winter items for new spring offerings.
Bargain hunters may have been disappointed in the shortage of clearance sales, but full-priced items more than compensated for the inflated results of the year-ago period, when many retailers mismanaged inventories and were forced to unload holiday product at cut-rate prices.
New spring apparel definitely took a hit in January, as well, but shoppers hit stores for winter items like gloves, coats and boots – items they shied away from in the year-ago period.
At the Discount chains, results were generally strong after a tough December that saw Target and Stein Mart miss forecasts badly. While high-end retailers have rebounded relatively quickly on the backs of wealthier consumers, the lower end of retail has struggled as lower-income consumers struggle to gain a foothold amidst a continued sluggish economy and high unemployment.
For January, consolidated comp store sales tracked by SEW edged higher despite weakness from Stein-Mart (-1.2%) which missed forecasts on weakness from the Northeast and parts of the Southeast and Midwest.
For the Department stores, Dillard’s (+6.0%) saw comps exceed expectations on strength from the Central and Eastern regions while Macy’s (+2.6%) outpaced estimates on strong online sales that offset weather-related store closures in the aforementioned regions. As noted, JC Penney (-1.2%) missed estimates due to weather while Kohl’s (+1.4%) missed estimates but still raised the low end of its Q4 and full year earnings guidance, pointing to strength within it’s burgeoning e-commerce business.
For the Luxury sub-segment, retailers continue to welcome the return of the full-priced consumer as all three reporting chains saw year-over-year comps improvement. Nordstrom (+4.8%) outpaced estimates but Saks (+4.4%) missed despite strong sales in dresses, shoes, handbags, fragrances and women’s designer clothing. At Neiman Marcus (+9.8%), strength was spurred from consumer interest in both new spring apparel and “last call” winter clearance while the retailer’s direct business approached 20% growth for the month.
For the Teen retailers, it was a mixed-bag, as usual. The usual stalwarts (The Buckle, Zumiez) turned in strong year-over-year results while Gap (+1.0%) reported surprisingly strong results on a favorable January from its high-end Banana Republic (+4.0%) stores.
For the warehouse clubs, BJ’s Wholesale (+2.7%, including fuel) narrowly outpaced forecasts on strength from food, health & wellness, small appliances and winter supplies. Management for BJs confirmed on Thursday it had decided to “explore and evaluate strategic alternatives, including a possible sale of the company.” In November, BJs announced it had hired Morgan Stanley to explore the options of a possible sale. At Costco (+9.0%, including fuel), comps easily exceeded expectations due partially to strength from its international segment.
Comparable sales growth was driven by an increase in comparable store transactions partially offset by a decrease in dollars per transaction. ZUMZ said that dollars per transaction were down due to a decrease in average unit retail and a decrease in units per transaction. Accessories, footwear, men’s, juniors and hardgoods posted positive comps while boys posted negative comps. ZUMZ’s highest comping region was the South, which was up 16% in January.
Quarter-to-date 2010 comparable store sales were 13% positive versus a negative 1.7% for the same period last year.
Comparable store net sales year-to-date for the 52-week period ended Jan.29, 2011 increased 1.2% from comparable store net sales for the 52-week period ended Jan.30, 2010.
Net sales for the 52-week fiscal period increased 5.7% to $949.8 million from net sales of $898.3 million for the prior year 52-week fiscal period ended Jan. 30, 2010.