SpendingPulse: Retail sales up in February
New York City — Retail sales in February rose in most categories ranging from clothing to furniture, despite winter storms and rising gas prices, MasterCard Advisors’ SpendingPulse, which tracks spending in all forms including cash. While the increase maintains the positive performance that began in fall 2010. However, February’s year-over-year growth rates were smaller in most categories than those recorded in the November 2010 through January 2011 period.
“February held onto the momentum from the last few months. Ongoing strong performance by the financial markets and growing consumer confidence may have contributed to ongoing retail growth, especially in the upper tier of the different categories. This is even in the face of the disruptive weather that put a damper on spending in several sectors,” said Michael McNamara, VP research and analysis at SpendingPulse.
Here are some details on how the individual retail sectors fared in February:
- In apparel, sales rose 6%, with increases in men’s, women’s and teen clothing.
- Furniture sales rose 4%, the fourth consecutive monthly increase for that category, one of the hardest-hit during the recession.
- E-commerce posted its fourth consecutive month of double-digit growth, rising by 13.2%, slightly higher than January’s 12%.
Michael McNamara said that if gas prices continue to rise — the national average gasoline price passed the $3.15 mark last month for the first time since 2008 — it could put a damper on spending.
"That’s one of the things on the watch list," McNamara said.
Online sales rose 13.2%, continuing to outpace physical store sales. Higher gas prices actually could help online sales, McNamara said, if more people decide to shop at home.
Electronics and appliance sales fell 4.1%.
The International Council of Shopping Centers expects revenue in stores open at least one year will rise 2.5% to 3% industrywide.
"February has definitely been a rollercoaster ride for retailers as weekly sales continue to bounce back and forth," said Michael Niemira, ICSC VP research and chief economist, in a note last week.
Staples grows profits despite soft sales
Framingham, Mass. — Fourth-quarter sales at Staples increased slightly to $6.4 billion, net income increased 17% to $275 million, and earnings per share increased 19% to 38 cents courtesy of a favorable tax benefit of six cents.
Staples chairman and CEO said he was proud of all the company achieved in 2010.
“We got back to growing the top-line, achieved solid operating margin expansion and earnings growth, and generated over a billion dollars in free cash flow. While the fourth quarter was challenging primarily due to the impact of winter storms, sales have recovered in the first quarter of 2011. Our business is healthy, we’re investing in the right things, and our growth initiatives are gaining traction and positioning us well for a strong 2011.”
For the full fiscal year ended Jan. 29, total company sales increased 1% to $24.5 billion, net income increased 19% to $882 million and earnings per share increased 19% to $1.21.
Looking at Staples three major divisions, the company said the performance of its 1,900 store North American retail division highlights ongoing weakness for small and medium size businesses. Same-store sales decreased 2% in the fourth quarter, although the company indicated bad weather impacted those results and computer and peripheral products were soft. Total sales decreased slightly to $2.6 billion. The retail division achieved full-year sales of $9.5 billion, which was an increase of 2% compared with 2009, but that growth was driven by the addition of 41 new stores as comps declined 1%.
Staples North American Delivery business grew sales at a faster rate than retail, advancing 3% to $2.5 billion for the fourth quarter, while full year sales increased 2% to $9.8 billion. Despite the top-line improvement, operating margins declined slightly for the quarter to a still healthy level of 8.31%, but increased slightly to 8.54% for the year.
The company’s third major division, International, reported sales of $1.4 billion that were flat when measured in local currencies, while operating margins increased slightly to 4.21%, well below the rate of profitability achieved by the company’s North American Retail and Delivery businesses. The international division includes 381 stores.
Going forward, Staples has incorporated further modest improvement in economic conditions into its expectations for a first quarter sales increase in the low single digits and earnings per share of 30 cents to 32 cents. For the full year 2011, the company expects sales to increase in the low to mid single-digits with earnings per share in the range of $1.50 to $1.60 for the full year. Capital expenditures are planned at $500 million, compared to $409 million last year. The company said it expects to generate more than $1 billion in free cash flow, comparable with last year.
J.Crew shareholders approve buyout by TPG, Green
New York City — Shareholders of J.Crew Group have approved a $3 billion deal to be taken private by two investment firms.
The $43.50-per-share buyout by private-equity firms TPG Capital and Leonard Green & Partners is expected to close on or near next Monday. J. Crew CEO Millard (Mickey) Drexler will remain with the company.
Proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co. had both advised investors not to support the bid, Bloomberg reported. The chain had held last-minute meetings to convince large investors to vote in favor, three people familiar with the matter said this week, according to the report.
J. Crew began an 85-day "go shop" period when it would entertain other bids after it agreed in November to be bought by TPG and Leonard Green. It extended the period by a month after settling a shareholder lawsuit challenging the acquisition. Even after the extension, J. Crew said it was in talks with some interested parties but did not receive any firm alternative bids.