Despite a spike in oil prices and stormy weather in the Northeast and Midwest, U.S. consumers extended their shopping spree into February...
NEW YORK — Despite a spike in oil prices and stormy weather in the Northeast and Midwest, U.S. consumers extended their shopping spree into February, handing retailers better-than-expected sales for the month.
A broad range of companies beat Wall Street sales forecasts, including Nordstrom, Wal-Mart, Target, J.C. Penney, Talbots and teen retailers such as Abercrombie & Fitch.
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February’s results were the strongest gain since May 2004, when the tally recorded a 5.4 percent increase, and came on top of a 6.7 percent gain in the year-ago period. In January, the nation’s retailers reported a 3.6 percent increase.
As merchants reported their results yesterday, it was clear that factors including new spring fashions and bigger tax refunds helped boost spending, but analysts also pointed to a generally improving economy, particularly the job market, that has helped reinvigorate business since the beginning of the year.
Upscale retailer Nordstrom had a 7 percent increase in comparable store sales — a key retail gauge also known as same-store sales — well exceeding the 3.7 percent Wall Street estimate.
The Seattle-based retailer said the spring selling season was off to a good start, particularly for men’s apparel, women’s shoes and accessories.
Neiman Marcus also reported an 7.7 percent gain in same-store sales, better than the 5.5 percent forecast.
Especially encouraging were reviving sales at mid- and lower-priced department stores, such as Kohl’s and Sears, which had struggled as customers worried about job security cut back their spending.
Warehouse-club chain Costco Wholesale reported a 7 percent jump in comparable sales. The company said, however, analysts’ third-quarter and full-year profit forecasts were at the high-end of their own estimates.
Among the few disappointments were Limited Brands and May Department Stores, which announced Monday it was being acquired by Federated Department Stores.
“The final February tally is very robust,” said Ken Perkins, retail analyst at RetailMetrics, a research firm in Swampscott, Mass. “The strength was across all retail categories. The economy appears stronger than initially expected. And consumers are responding to spring fashions, despite the cold-weather snap.”
Consumers’ tax refunds, which on average are larger than a year ago, are giving consumers an added incentive to spend. Stores, particularly discounters, also benefited from the timing of the Super Bowl, which was played in February this year, after being held in January in 2004.
The International Council of Shopping Centers-UBS sales preliminary tally of 69 stores rose 4.9 percent, much better than the 3.3 percent increase it had projected. The tally is based on same-store sales, which are sales at stores opened at least a year, considered the best indicator of a retailer’s health.
Analysts said the surge in oil prices last month didn’t seem to hurt spending, but they are still concerned about the impact that higher energy costs could have in March and beyond.
February — which offers a last chance for stores to clear out winter merchandise and marks the big introduction of spring apparel — is the second-least important month of the year, behind January. Still, February’s strong results offer encouragement to retailers as they move into the heart of the spring selling season.
Wal-Mart reported a 4.1 percent increase in same-store sales, surpassing the estimates of analysts surveyed by Thomson First Call; they had forecast a 3.7 percent gain. Target said same-store sales rose 9.0 percent, exceeding the 6.4 percent estimate.
The department-store sector also had a solid month, with luxury retailers again reporting the biggest gains, but the performance between the high-end and lower-end stores narrowed in February, according to Phil Zahn, a retail analyst at Fitch Ratings.
“This may suggest that the lower-income and middle-income consumers are perhaps feeling better about their job security and are more willing to spend than they had in the past,” Zahn said.
Federated had a 1.8 percent gain in same-store sales, better than the 0.5 percent decline Wall Street expected.
Sears’ same-store sales in its domestic business rose 1.3 percent, surpassing the 0.4 percent estimate.
But May suffered a 4.1 percent decline in same-store sales, worse than the 2.7 percent Wall Street anticipated.
Teen retailers had a solid performance, fueled by looks incorporating embellished denim and bright colors such as coral, according to Todd Slater, retail analyst at Lazard Freres.
Abercrombie & Fitch posted a 19 percent gain in same-store sales in February, well past the 8.6 percent projection. American Eagle Outfitters said Wednesday that same-store sales soared 32.4 percent, beating the 12.9 percent estimate from Wall Street.
Information on Nordstrom and Costco provided by Seattle Times retail reporter Monica Soto Ouchi.