Wal-Mart leads discount category in February with 5.1% increase
New York City Americans remained focused on groceries and other necessities in February, resulting in another month of sales declines for many merchants. But the results were not as steep as Wall Street expected.
Wal-Mart Stores led the discount store category. The chain’s February same-store sales jumped 5.1%, excluding fuel sales. Analysts surveyed by Thomson Reuters, on average, expected a rise of 2.4%.
The company said both traffic and the average amount spent per transaction rose in February.
“We believe falling gas prices significantly boosted household disposable income in February and therefore allowed for both more trips and more spending towards discretionary categories,” vice chairman Eduardo Castro-Wright said in a statement.
Target Corp.’s same-store sales declined 4.1%, less than the 4.8% drop that Wall Street expected. The retailer said groceries and health products were the biggest sellers while apparel and home products were weaker. The average amount shoppers spent per trip fell during the month.
In other results:
Duckwall-ALCO Stores said Thursday its same-store sales rose 9.4% in February.
TJX Cos. said sales were flat from a year ago — better than the 1.8% drop expected.
Stein Mart said its same-store sales dropped 12.2% in February, a bigger decline than Wall Street expected.
Analysts pointed out that February’s figures, boosted by retailers’ tight control of their inventory, are unlikely to mark the beginning of a recovery. Consumers are still grappling with massive job cuts, tight credit and plummeting stock portfolios.
The retail sales reports came as the Labor Department said that the number of new jobless claims and the total number of people receiving unemployment benefits both dropped unexpectedly last week, although though they remain high. Economists surveyed by Thomson/IFR expect data out Friday to show that unemployment rose to 7.9% in February from 7.6% in January as companies kept slashing jobs.
Costco sees sharp decline in 2Q profits
A combination of weak consumer demand and a strong dollar led to a significant decline in Costco’s second quarter profits, the company announced.
Sales dropped 1% to $16.5 billion from $16.6 billion, while net income declined 27% to $240 million, or 55 cents a share, from $328 million, or 74 cents a share. Total company same-store sales for the second quarter declined 3%, but increased 5% if the negative effects of foreign exchange rates and gasoline prices are excluded.
“Second quarter 2009 earnings results were negatively impacted by a variety of factors, primarily centered around overall weak economic conditions,” said Costco CFO Richard Galanti. “In particular, our quarterly results were hurt by the continued weakness in non-foods sales and related margins. Margins in foods and non-foods were also negatively affected by increased pre-holiday seasonal markdowns and other selective price reductions to drive sales and increase market share. In addition, results were hurt by lower year-over-year gasoline profits and lower reported international profits, the latter a result of the significant strengthening of the U.S. dollar when compared to the currencies of Canada, the United Kingdom, Korea and Mexico.”
Membership income did grow however, increasing to $355.6 million from $342.9 million.
The company also announced February sales results for the period ended March 1 that declined 1% to slightly more than $5 billion. February same-store sales declined 3%, consisting of flat sales domestically and a 15% decline internationally. Excluding the effect of gasoline deflation on domestic results, same-store sales at U.S. units increased 4%. Same-store sales internationally increased 8%, excluding the negative effect of exchange rates.
Costco operates 553 clubs, 406 of which are located in the United States and Puerto Rico. Internationally, the company operates 76 clubs in Canada, 31 in Mexico, eight in Japan, six in Korea and five in Taiwan. An additional 10 to 11 new clubs are expected to open by the end of the company’s fiscal year on Aug. 30.
Kmart launches multi-channel campaign partnership with WWE
HOFFMAN ESTATES, Ill. Kmart has partnered with World Wrestling Entertainment for a multi-channel entertainment marketing promotion supporting the 25th Anniversary of WrestleMania. The exclusive “WrestleMania Madness” is only at Kmart.
Kmart stores across the country will feature a front-end product boutique from March 8 to March 21 showcasing the best in WWE licensed products including apparel, toys, bedding, entertainment and gaming accessories. In addition, consumers who purchase $50 or more in WWE merchandise available in Kmart stores will receive $10 off their 25th Anniversary of WrestleMania pay-per-view buy.
Kmart’s promotion also includes a microsite, www.kmart.com/wwe ,Web banners and e-mail blasts. And, for the first time ever, Kmart will host Live Chats on March 9 and March 16 at 8:30 p.m. EDT with WWE Superstars. In addition, Kmart is supporting the promotion with a designated 25th Anniversary of WrestleMania circular spread, in-store radio and TV broadcasts, extensive in-store point-of-sale, including WWE Superstar hanging signs, security shrouds and shelf talkers.