Bargain Hunting Fuels Rise in Retailers’ Sales

U.S. retailers’ same-store sales rose 2.8% in February, led by Wal-Mart Stores Inc., Kmart Corp. and Costco Wholesale Corp., as a slowing economy prompted consumers to buy low-priced household goods and clothing.

The results, calculated by Bank of Tokyo-Mitsubishi Ltd., were in line with the forecast for a 2% to 3% gain. The increase in sales at stores open at least a year is less than January’s 4.8% gain and well below the 6% rise in February 2000, last year’s second-biggest monthly percentage rise.

Merchants cleared out leftover holiday items and restocked stores with spring goods last month. Consumers, whose confidence in the economy last month fell to the lowest point in more than 4 1/2 years, mainly shopped at discount chains that sell basic products and food. Some retailers said the Federal Reserve’s two recent interest-rate cuts will revive spending in the second half.

“Consumers clearly are buying less, but they aren’t afraid; they’re just finicky,” said analyst Steve Paspal at Sovereign Asset Management, a unit of John Hancock Funds.

Same-store sales are an important retail indicator because they exclude new and closed locations.

Although the industry’s same-store sales results met the forecast, about 49% of the 75 chains surveyed had same-store sales declines, the largest amount since July 1996.

“The strength was concentrated in a few retailers,” said Michael Niemira, an economist at Bank of Tokyo-Mitsubishi. “The feeling of the month is much more negative than the number reported.”

Wal-Mart, the world’s largest retailer, said same-store sales rose 4.3% from last year. Kmart reported a 3.3% gain, at the high end of analysts’ forecasts. Target Corp., the third-biggest discounter, said on Tuesday that sales rose 1.5%.

Costco, the biggest U.S. chain of warehouse clubs, said its same-store sales grew 5%. The company also reported a 3% decline in fiscal second-quarter earnings to $176.6 million, or 38 cents a share, meeting analyst expectations. Sales rose 7% to $8.16 billion in the quarter, while revenue from new memberships rose beyond analyst expectations.

Few gains were posted among specialty and department-store chains. Sears, Roebuck & Co., the biggest U.S. department-store company, said U.S. same-store sales dropped 2%.

Federated Department Stores Inc., which owns Bloomingdale’s and Macy’s stores, reported a 1.6% decline, and Dillards Inc. said sales fell 2%. J.C. Penney Co. reported a 2.1% decline last week.

May Department Stores Co. posted a 1.1% decline. Separately, May said it plans to buy 13 of the stores run by Montgomery Ward & Co., which announced liquidation plans in December. Terms and locations of the stores weren’t immediately available.

An exception to the weak department store sales in February was low-priced department store Kohl’s Corp., which reported a healthy gain of 7.3%.

Sales at Gap Inc., the largest U.S. clothing chain, dropped 11%. The owner of the Gap, Old Navy and Banana Republic chains is trying to improve marketing, apparel offerings and management to reverse a slump in sales.

Talbots Inc., a women’s career-clothing chain, had a 9.3% increase, which was at the high end of forecasts. The chain had a 20.4% increase a year ago.

Rival AnnTaylor Stores Corp. fell 6.1%. The company, which is replacing slow-selling styles with the classic fashions it’s known for, cut its earnings forecasts for the first two quarters of fiscal 2002 but said profit for the full year may beat estimates.

Limited Inc.’s sales were little changed. Victoria’s Secret parent Intimate Brands Inc., which is majority-owned by Limited, said same-store sales dropped 5%.

Teen retailers Abercrombie & Fitch Co. and Hot Topic Inc. had 6% and 10% gains, respectively.