Retail sales show strongest gain since before the recession
The retail industry’s slow but steady recovery picked up the pace in February, with the nation’s merchants posting the best sales results in more than two years.
Despite severe snowstorms in the East, shoppers still turned out at the nation’s malls to buy spring merchandise and other goods, helping retailers report a 4% year-over-year sales increase last month, according to Thomson Reuters’ tally of 28 major chains.
It was the strongest gain since November 2007, a month before the recession began, and the sixth consecutive month of increases.
With the exception of drugstores, every sector -- including discounters, department stores and apparel sellers -- did better than predicted, Thomson Reuters said. Of individual retailers, more than three-fourths outperformed expectations, including Ross Stores Inc., Nordstrom Inc. and Abercrombie & Fitch Co.
“Given the snowstorms and barrage of negative economic data last week, it was a bit of a surprise how strong the sales were this month,” said Ken Perkins, president of research company Retail Metrics Inc. “I think the retailers have to be pleasantly surprised and are hopeful that this is the tip of an increasing wave of consumer spending.”
But many industry watchers cautioned that results are being helped by weak year-earlier sales and that economic problems persist.
Housing and commerce reports released Thursday showed mixed results, and Friday’s jobs report is expected to show continued weakness in the unemployment picture.
“Although some numbers are certainly very good, they’re inflated or helped along by very weak sales a year ago,” said Kamalesh Rao, director of economic research at SpendingPulse, an information service of MasterCard Advisors, which also tracks retail spending. “It’s not quite firm footing; it’s not quite robust growth, but we’re not experiencing the same stagnation that we saw last year.”
Although the economy hasn’t fully recovered, consumers strolling along Pasadena’s Colorado Boulevard on Wednesday said slowly improving conditions made them more willing to spend on discretionary items.
Tarik Adlai, a lawyer from Silver Lake, said he didn’t shop for clothes last year because money was tight.
But last month, “I went out and bought a lot of stuff, clothes that I hadn’t bought in a while,” said Adlai, 46, who estimated he spent about $800 on the shopping spree. “I’m just feeling a little more comfortable.”
The month’s best performers included off-price seller Ross, which posted an 11% sales increase, and upscale department store chain Nordstrom, with a 10.3% rise. TJX Cos., which operates off-price chains T.J. Maxx and Marshalls, and Limited Brands Inc., parent of chains such as Victoria’s Secret and Bath & Body Works, posted 10% gains.
Wal-Mart Stores Inc., the world’s largest retailer, no longer reports sales data on a monthly basis.
Results are based on sales at stores open at least a year, known as same-store sales. They are considered an important measure of retail health because they exclude the effects of store openings and closings.
The biggest surprise came from beleaguered teen retailer Abercrombie, which posted a 5% gain, much better than the 6.9% decline that analysts had expected.
It was Abercrombie’s second consecutive month of positive same-store sales after a streak of 20 months of negative results, a result of the company’s refusal to widely discount its merchandise during the recession.
Some retailers, including department store chain Macy’s Inc., said sales would have been better if weather conditions hadn’t been so difficult.
“Sales performance was strong at both Macy’s and Bloomingdale’s in February, despite a series of winter storms that affected store operations in some of our largest markets during key selling periods of the month,” Chief Executive Terry Lundgren said in a statement. “If not for the storms, we estimate that our February same-store sales would have been up by approximately 5%.”
Weaker players included teen seller Hot Topic Inc. of City of Industry, which reported a 7% decline. Still, that was better than the 13.1% drop that analysts surveyed by Thomson Reuters had predicted.
In the coming months, analysts are hoping that pent-up demand will drive sales.
But many consumers say they’re not ready to spend extravagantly.
In Pasadena on Wednesday, Julie Hager, 39, bought two fleece hoodies from Gap for $20 each but said she was shopping for deals only. “I only bought what I did because it was on sale,” she said.
Over at trendy retailer H&M, Arevik Manukyan was holding up a blue polka dot shirt and said she still planned to stick to her frugal ways -- just in case.
“This is the first time I’ve been out casual shopping in a really long time,” the 26-year-old from Koreatown said. “Because I got in the mode of just buying what I need, I’m trying to stick to that. I’m still not the reckless spender that I used to be.”
