Biggest Retail Gain in Nearly 2 Years
Retailers on Thursday reported their strongest sales increases in nearly two years in February, exceeding estimates and offering more evidence that an economic recovery is underway.
The strong numbers, along with low inventories of unsold goods, will benefit retailers into the second half of the year, analysts said.
Though discounters such as Wal-Mart Stores Inc. continued to shine, some department stores and specialty retailers continued to post sluggish results.
The better-than-expected February retail sales, along with other positive economic data, are prompting many analysts to predict a stronger economic recovery.
“The improvement has come much faster than most of us thought,” said Michael Niemira, an economist with Bank of Tokyo-Mitsubishi in New York. “Most of us thought there would be a sluggish first half. I am no longer making that case because it’s clear that a lot of economic numbers for the first two months of the year are strong, in retail and the rest of the economy.”
Consumers in February took advantage of warmer-than-usual winter weather throughout much of the country to do some early spring shopping, giving a sizable boost to discount stores in particular.
Many mall-based stores, however, were left out in the cold. Specialty apparel stores were the only retail group to post lower year-over-year sales for February at stores open at least a year.
Overall, sales grew 6.2% in February, according to a Bank of Tokyo-Mitsubishi tally, the biggest year-over-year increase in so-called same-store sales since April 2000. Goldman Sachs pegged the overall retail sales gain at 5.5%.
The country’s mass merchants again led the charge, with a 10.3% year-over-year gain for February in stores open at least a year, according to the Bank of Tokyo-Mitsubishi index.
Wal-Mart sales increased 11% at its discount stores. Target Corp. gained 10% at its namesake stores open at least a year. Same-store sales are considered an important measure of a company’s overall health because the number excludes new and closed stores.
Sales of specialty hard goods, especially at home improvement stores that continue to benefit from low interest rates that are fueling housing sales, were up 9.4%, Goldman Sachs said.
At the other end, specialty apparel stores saw sales fall 5.7%, Bank of Tokyo-Mitsubishi reported.
That category was dragged down by poor showings at Gap Inc., with sales down 17%; Abercrombie & Fitch, with a 9% decline, and even usually strong Talbots Inc., which saw sales slide 17.7%, mostly from a shift in the stores’ winter clearance sales.
Department store sales were essentially flat, according to Goldman Sachs’ retail index, with a 0.3% gain, boosted mainly by a 12.5% increase at J.C. Penney Co.’s department stores and a 14.4% sales rise at Kohl’s Corp., the clothing seller that has become a Wall Street darling with month after month of booming sales. Target Corp.’s Mervyn’s stores also posted better-than-expected sales for February, with a same-store sales gain of 2.5%.
Most of the rest of the sector performed as expected, with Federated Department Stores Inc., parent of Macy’s and Bloomingdales, down 2.8%, and May Department Stores Co. down 2.7%.
