Advertisement

Weather Hurts Retail Sales

Times Staff Writer

Stormy weather chilled sales of early spring apparel in February as U.S. retailers logged their weakest monthly gains since May.

Sales at established stores rose 3.2% from a year earlier to $49.3 billion, the International Council of Shopping Centers reported Thursday in its tally of 59 retail chains nationwide.

The results, though generally in line with analysts’ expectations, were in contrast to strong gains in January, when the winter weather was unusually mild. Almost 60% of the retailers monitored by Thomson Financial missed expectations.

Three California apparel sellers offered the most positive surprises, exceeding analysts’ expectations.

Advertisement

Teen retailer Wet Seal Inc. of Foothill Ranch said February sales soared 29.3% at stores open at least a year, and children’s clothier Gymboree Corp. of San Francisco notched an 18% gain. Guess Inc., a Los Angeles-based seller of trendy apparel, recorded an 8.6% increase from a year earlier.

But two other San Francisco companies were among the month’s big losers: Sharper Image Inc.'s sales sank 31% from a year earlier, badly missing analysts’ expectations of an 8.3% decline. And Gap Inc., the largest specialty apparel retailer, logged an 11% decline as sales dropped in all divisions: Gap, Old Navy and Banana Republic.

Investors knocked 16% off Sharper Image’s stock price, which fell $1.91 to $9.75. Gap sank 38 cents to $18.28.

In an unexpected twist, the teen segment advanced 2.1% in February, well off last year’s 12.1% gain. Abercrombie & Fitch Co. disappointed with a 5% increase, well short of the 13.6% that analysts had anticipated. Its shares tumbled $6.20, or 9%, to $61.05.

Advertisement

Discounter Wal-Mart Stores Inc. and rival Target Corp. both logged results that were slightly higher than expected, 3.2% and 3.6%, respectively. Wholesale clubs such as Wal-Mart’s Sam’s Club and Costco Wholesale Corp. registered the strongest collective gains, rising 6.2%.

The February numbers, though disappointing to many retailers, don’t necessary say a lot about the rest of the current fiscal first quarter.

Michael Niemira, chief economist for the shopping center group, noted that when January and February results were combined, so-called same-store sales rose 4.1%, slightly more than 2005’s overall gain of 3.8%.

“It appears we probably saw a number that was inflated by special factors in January and deflated by some of the same factors in February,” he said. “But the trend has largely held.”

Advertisement

Thomson Financial said shoppers might be “starting to sag under the strain of winter utility bills.” But weather was the main problem for retailers, upsetting shopping patterns in many parts of the country. It was the first time since 1989 that February was colder than January, according to Planalytics, which helps companies calculate how weather will affect business.

Storms, for example, cost retailers a weekend of shopping in the Northeast when a blizzard dumped a record 26.9 inches of snow in New York’s Central Park on Feb. 12. Unusual circumstances can have a pronounced effect on months such as January and February, typically the two weakest selling months of the year.

Another anomaly could hurt this month’s results: Easter, in March last year, will be in April this year.

“We’ve already received several warnings from big retailers like Wal-Mart,” analyst Jharonne Martis of Thomson Financial said.

Advertisement

Niemira predicted that same-store sales would rise about 3% this month, adding that there was little evidence that shoppers were set to retreat. Still, there are some worrisome signs.

The Conference Board’s expectations index, which gauges how consumers view the next six months, fell last month to its lowest level in three years, excluding the two months after Hurricane Katrina.

Shoppers “are growing increasingly concerned about the short-term health of the economy and, in turn, about job prospects,” Lynn Franco, director of the board’s Consumer Research Center, said in a report this week.


Advertisement