February sales better than expected; Limited and Zumiez top apparel segment
New York City — Many retailers reported better-than-expected sales in February amid milder mid-month temperatures in many parts of the country. But some warned of a weaker March due the timing of the Easter holiday. Analysts also cautioned that rising fuel prices may damper consumer spending going forward.
The Thomson Reuters Same-Store Sales Index rose 4.2% in February, topping estimates for a 3.6% increase, and also rising higher than in the year-ago period.
February is considered the least important month of most retailer’s fiscal first quarter calendar, as it generally is focused on clearing out winter-related merchandise, and preparing for the release of goods for the warmer weather ahead.
In the apparel segment, the winners included Limited Brands, whose same-store sales jumped 12%, topping the 8.5% average estimate of analysts surveyed by Thomson Reuters. Sales at its Victoria’s Secret chain surged 15%, while those at Bath & Body Works climbed 10%.
Zumiez continued its hot streak. The teen retailer said that February same-store sales jumped 12.8%, topping analysts expected 4.2% increase.
Gap, however, fell short of expectations, reporting a 3% decline in same-store sales. Thursday its revenue at stores open at least a year and the associated online sales declined 3% in February, hurt by weak sales in the Midwest.
By division, Banana Republic reported a 4% drop in same-store sales, while sales at Gap stores in North America dropped 1%. Sales at Old Navy North America fell 4%. International sales declined 7%. Analysts surveyed by Thomson Reuters expected a 4.2% increase.
This is the first month that Abercrombie 7 Fitch and American Eagle Outfitters did not report same-store sales on a monthly basis. The two teen retailers joined a growing number of retailers, including Wal-Mart Stores, that no longer report same-store sales each month.
In other apparel same-store sales results for February:
Destination Maternity Corp.’s sales gained 2.6%, helped by improving weather conditions later in the month.
Cato Corp. reported a 5% rise in sales, rose 5% percent in February, helped by a shift in the timing of income tax refunds and more favorable weather than in the year-ago period.
The Buckle’s sales were up 2.1%, short of analyst expectations.
Wet Seal’s sales rose 7%, better than expected. Online sales rose 20% from a year ago. The company said it plans to open 30 new Wet Seal stores in fiscal 2011.
Hot Topic’s sales fell 1.4%. Analysts had predicted a 5% decline.
New execs named at Zale Corp.
DALLAS — Zale Corp. announced that Jeannie Barsam has been named SVP merchandise planning and allocation, and Toyin Ogun has been named SVP human resources and customer service.
“Jeannie and Toyin add both critical experience and depth to our leadership team,” said Theo Killion, CEO. “These appointments exemplify the strategic investments we are making in organizational capability to drive our turnaround initiatives.”
Barsam was most recently SVP planning, allocation and company planning for Charlotte Russe. Prior to that, she served as SVP inventory management and merchandise systems at Talbots and VP merchandise planning and allocation at Gap. Earlier in her career, she served in merchandising and planning roles at Mervyn’s and Lane Bryant. She will report to Matt Appel, EVP and CFO.
Prior to joining Zale, Ogun was SVP human resources at L.L. Bean where he was responsible for all human resources activities and served in a leadership role in IT integration, international and direct to business growth projects. Prior to that, Ogun served as SVP human resources at Sears and earlier at Limited Brands. He will report to Theo Killion, CEO.
Grocery gains again fuel Target’s comp growth
MINNEAPOLIS — February same-store sales at Target advanced 1.8%, thanks to the addition of fresh food and consumables that are part of an aggressive remodeling program causing more people to shop its stores. The company said more than half of its February same store-sales gain was driven by an increase in transactions combined with a small increase in the average transaction size. The 1.8% gain comes on top of a 2.4% increase in February 2010.
The strongest performance came in the grocery category where comps increased in the low teens while the health care, beauty and other household essentials experienced gains in the mid- to upper single-digit range. Also showing strength was the apparel category where comps increased in the low to mid single digit range.
“Target’s February comparable-store sales were in line with our expectations, as our REDcard Rewards and PFresh remodel programs continue to drive meaningful incremental sales and traffic in our stores,” said Target chairman, president and CEO Gregg Steinhafel.
The rewards program was launched last fall at stores nationwide and offers those who used Target branded credit and debit product 5% off all purchases. The PFresh program is an ambitious store remodeling effort that has as its signature component the addition of fresh foods and an expanded dry grocery and consumable offering to existing Target discount stores.
A 1.8% comp isn’t exactly a home run though and Target did report weakness in other areas. For example, hardlines decreased in the upper single-digit range and the home category, a traditional strength of Target, declined in the low to mid single-digit range.
Looking ahead to March, the company noted the late arrival of Easter this year will cause sales to shift to April and causing March comps to decline in the mid to upper single-digit range. Conversely, April results are forecast to benefit and be in the mid-teens. The blended same store sales performance for the two months is forecast in low single-digit territory.