Retailers Show Mixed January Sales; Macy's, Costco Standouts
05 February 2010 - 1:13AM
Dow Jones News
Retailers are off to a mixed start as they post January
same-store sales, with Macy's Inc. (M), Costco Wholesale Corp.
(COST) and Abercrombie & Fitch Co. (ANF) standouts as they beat
expectations and offered upbeat outlooks.
About two dozen retailers have been heard from with just about
half beating expectations, including Macy's, which said its
restructuring, including catering more to local tastes, is paying
off, prompting the retailer to lift fourth quarter earnings
expectations. Costco said higher gasoline prices and strengthening
foreign currencies had a positive impact on January's comparable
sales. And Abercrombie & Fitch, the teen retailer that has
struggled the most during the recession, posted growth of 8% for
January same-store sales, when analysts expected a 8.4% drop.
Limited Inc. (LTD) and Children's Place Retail Stores Inc. (PLC)
also beat projections, with Children's Place saying it will no
longer post monthly same-store sales.
All told, retailers tracked by Thomson Reuters are expected to
post a 2.5% rise in January same-store sales, after a 2.9% gain in
December and a 5.7% drop in January 2009.
Hot Topic Inc. (HOTT), Fred's Inc. (FRED) and Buckle Inc. (BKE)
have missed expectations. Buckle had been a big winner among
retailers for most of last year. But the teen retailer posted a
January same-store sales drop of 1.2%, when a 4.1% rise was
expected. The decline for Buckle was the first since Thomson
Reuters began tracking the company in 2006, and came after a double
digit percentage gain in January 2009.
A couple of retailers are feeling good enough to say they are in
inventory rebuilding mode, after the industry slashed merchandise
for a good part of 2009. Wet Seal Inc. (WTSLA), which raised its
fourth-quarter earnings estimate to 8 cents to 9 cents a share from
6 cents to 7 cents a share after its 3.7% January same-store sales
drop was in line with expectations, noted inventory per square foot
was up 12% as it finished the fourth quarter.
Most retailers' fourth quarter closes at the end of January,
with sales for the month accounting for about 5% to 7% for mass
merchants, including discounters, and department stores like
Macy's. January is generally their lightest sales month in terms of
volume.
"I think we're seeing that customers came out after Christmas
and stayed out a bit," said Janet Hoffman, global managing director
for retail at Accenture PLC (ACN), a management consulting firm.
"Retailers are doing a significantly better job at managing
inventory so the markdown frenzy we saw last year isn't occurring,"
which will help profitability.
As for upping inventory now, "it's an optimistic approach and I
don't think many major retailers will begin going that route soon,"
Hoffman said.
Many retailers that missed expectations are using the weather
and the still-wobbly economy as a good part of their reason. Fred's
said that its miss can be attributed from "multiple ice and
snowstorms blanketing the majority of our stores in the Southeast"
and double-digit unemployment.
Retail stocks are mixed premarket, with Macy's ahead 4.9% to
$17.03, Abercrombie & Fitch Co. up 9% to $34.83 while Buckle
was down 2.4% to $31.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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