Discounters drive retail sales growth
Retail sales rose more than expected in February as shoppers headed to discounters in search of bargains. But with Americans in no mood to splurge, luxury retailers collectively posted their weakest result since December 2001.
Sales at stores open a year or more rose 1.9% to $52.8 billion, according to the International Council of Shopping Centers’ tally of 39 retail chains released Thursday. The group expected a 0.5% to 1% rise. In some cases, gains were tied to rising prices.
“The main theme here is ‘cheap is in,’ ” said Jharonne Martis, senior research analyst for Thomson Financial. Although most companies beat analysts’ expectations, “it was clear that consumers were struggling.”
Wal-Mart Stores Inc. helped lift the results, posting a 2.6% gain, instead of the 1.1% that was expected. Costco Wholesale Corp. and BJ Wholesale Club Inc. also beat expectations, aided by sales of gasoline, which was 25% more expensive last month than in February 2006.
Britt Beemer, chairman of America’s Research Group, noted a shift when he pulled his Infiniti up to a BJ Wholesale Club pump Thursday in Orlando, Fla. “There was a BMW, a Mercedes, an Infiniti, a Jag and a Volvo getting gas at the same time I was,” he said. “Everybody is trading down.”
Some California companies posted the biggest surprises, positive and negative.
Anaheim-based apparel seller Pacific Sunwear of California Inc. logged a 6% increase, instead of the 0.4% decline expected. Foothill Ranch-based Wet Seal Inc. logged an 8.2% drop, bigger than the 2.2% fall that was forecast.
San Francisco-based Gap Inc.’s same-store sales fell 6%, more than the 2.8% drop that Wall Street was expecting. The retailer’s Gap, Old Navy and Banana Republic chains all lost ground.
Department stores continued to struggle as apparel sales limped along. J.C. Penney Co. posted a 6.7% decline and said another slip was likely this month. (Macy’s Inc., joining a growing list of retailers, has stopped releasing monthly sales figures.)
Nordstrom Inc. notched a 5.8% decline, more than the 3.5% drop anticipated. Neiman Marcus fell 7.3%. As a group, luxury chains slipped 4.3%.
Lower-priced apparel chains Ross Stores Inc. and TJ Maxx did better, with advances of 4% and 3%, respectively.
The results show “huge pockets of weakness in the retail sector,” said Michael Niemira, chief economist for the shopping center group.
February is the second-leanest month of the year for retailers, a time to unload winter goods and make way for full-priced spring merchandise.
Now, however, each month is being scrutinized as economists and experts try to track the mood of consumers who are worried about the weak housing market, tighter credit, shrinking stock portfolios and the rising prices of food, fuel and other basic goods. Consumer spending accounts for 70% of U.S. economic activity.
Easter falls in March this year, two weeks earlier than in 2006. That should boost sales this month. But if the weather is too cold, it could frost sales of shorts, sandals and other springtime goods.
Niemira is predicting that same-store sales will rise 2% this month. But industry experts say that, so far, they see no sign that consumers are loosening up.
“It looks like a weak first quarter,” Martis said.
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