Wall Street Journal
By KAREN TALLEY
February 3, 2011
NEW YORK—Snow, sleet and freezing rain didn't keep all shoppers from their appointed rounds in January, as many retailers are reporting generally good sales for the month.
The fear was that holiday buying in November and December, combined with cold and stormy conditions throughout most of the country last month, pushed shopping to the bottom of many priority lists.
But initial reports show consumers shrugged off the bad weather, while the location of stores also played a role. Costco Wholesale Corp., which has a bigger presence in the lesser-hit western part of the U.S., as well as significant international operations, posted a 9% rise in comparable-store sales, or sales at stores open at least a year. Analysts were expecting a 6.1% gain from the warehouse club operator.
Macy's Inc. reported better-than-expected same-store sales in January, despite the harsh weather.
"Sales in January were restrained by the series of snowstorms that caused widespread store closings along the East Coast and in the Southeast," said Terry J. Lundgren, the company's chairman, president and chief executive.
Target Corp., said its same-story sales were below expectations, "particularly in portions of the South and the Northeast," said Gregg Steinhafel, the company's chairman and chief executive.
Limited Inc., which has been doing well for the entire quarter, which closes at the end of this month, raised its guidance for the period after posting a 24% jump in same-store sales for January. Analysts were expecting a 6.7% increase from the operator of Victoria's Secret and Bath & Body Works.
Teen retailer Wet Seal Inc. posted a 6.2% rise in comparable-store sales when a 4% decline was expected, and bumped up its fourth-quarter guidance.
Weather was, however, called out by a number of retailers. BJ's Wholesale Club, which has a big concentration of its warehouse clubs in hard-hit winter areas, posted a 0.3% gain in same-store sales, below expectations for 2%, and said "severe snowstorms" affecting the Northeast and Mid-Atlantic regions had a negative impact on merchandise comparable club sales of approximately 2.5%.
The company also announced plans to "explore strategic alternatives," which generally means a sale or a restructuring. Word broke earlier this month that private-equity firm Leonard Green & Partners LP is considering a hostile takeover bid for the warehouse club operator.
Teen retailer Hot Topic Inc. posted a 3.3% drop in same-store sales, when a 2.8% decline was expected, and estimated that inclement conditions hurt results by two percentage points.
Big Lots Inc. reported flat quarterly sales, which is at the low end of the close-out retailer's guidance. The company said the last three weeks of January "were impacted negatively by weather conditions in many of our major regions and markets."
But in general, "Weather, which had been the big scare factor, had less impact than many feared," said Edward Yruma, retail analyst at KeyBanc Capital Markets. "Also, some of the heavy promotions that retailers ran in January paid off."
Retailers generally came into January with less clearance merchandise than they had in the past couple of years, having planned more carefully for the holiday season after finding themselves overstocked the prior could of years.
But markdowns were still rife, with as much as 80% off in some stores as they tried to make way for spring merchandise that starts coming in during the month. That apparel generally hung on shelves as shoppers couldn't get into the mood given the cold weather. Some retailers kept the promotions going right through January.
"I spent $30 at J.C. Penney and my receipt said I saved $202," said Jharonne Martis, retail analyst at Thomson Reuters. Still, in general January typically accounts for about 20% of total sales for the quarter, which means it is not a make or break month.
The 28 retailers tracked by Thomson Reuters are expected to show that sales grew 2.7% in January. The figure compares with 3.3% a year ago and follows December's 3.1% gain and the 5.6% growth in November.
Abercrombie & Fitch Co., Aeropostale Inc. and American Eagle Outfitters Inc., which have yet to be heard from, will stop reporting monthly sales data after Thursday. The companies have declined to comment on their decisions.
However, industry watchers say the decision is based, in part, on a desire to remove some volatility from retailers' share prices caused by investors reacting to data from a very limited time period. Wal-Mart Stores Inc. stopped the practice in May 2009, and it was expected that other retailers would gradually follow suit.
Write to Karen Talley at karen.talley@dowjones.com
The contents of this article show how much our economy is changing from what we have seen in the past few years. The weather has been especially awful this winter and it is a great sign that despite this consumers are still going out and buying products. Obviously the marketing techniques being used are sales, as mentioned in the article, which offer lower prices as an incentive for people to go out and purchase. Apparently this technique is working. I think it is also a good sign that these mega corporations are succeeding because if they aren’t selling, then no one will.
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