U.S. retail sales climb 4.2% in February
The nation’s retailers delivered another strong sales performance last month, driven by store promotions, better weather and demand for spring merchandise.
In a report that helped buoy the stock market, major retailers posted a 4.2% year-over-year sales increase in February. The gain, which beat expectations for a 3.6% rise, was spread across all major retail categories, including discounters, department stores, apparel sellers and teen clothing chains.
“The breadth and the strength of the sales gain in February was encouraging,” said Michael Niemira, chief economist of the International Council of Shopping Centers. “This widespread improvement is on the heels of improving labor markets, broader improving economic conditions, and the reduction in payroll tax — all of which are more than offsetting the potentially negative drag of high fuel and food prices on consumer mind-sets.”
Thursday’s retail data helped push the Dow Jones industrial average up 191.40 points, or 1.6%, its biggest one-day gain in three months. Wall Street was also encouraged by a government report saying new claims for jobless benefits slid to their lowest level since May 2008. That raised hopes that the U.S. would report Friday that employer payrolls grew substantially last month.
With unemployment claims falling, “There must be a lot of new jobs getting created out there,” said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York.
The country’s high unemployment rate has been the last major problem hampering retail sales, analysts said. A significant improvement could brighten the retail picture even more.
All told, nearly two-thirds of retailers beat sales expectations in February, according to Thomson Reuters’ tally of 25 chains.
Luxury seller Saks Inc. had the best results, reporting a 15.3% increase that exceeded analysts’ expectations for a 4.9% rise. Sales rose 12.8% at teen chain Zumiez Inc.; 12% at Limited Brands, parent company of Victoria’s Secret and Bath & Body Works; and 8% at Costco Wholesale Corp.
In a recent interview at Saks’ Beverly Hills store, Chief Executive Steve Sadove said that after a difficult recession that caused high-end consumers to “shop in their closet,” the luxury seller was seeing a spending resurgence propelled by stock market gains. Categories such as designer shoes, handbags and fashion jewelry are all performing well, he said.
“It’s still not quite at prerecession levels, but it’s getting close,” Sadove said. “I think there’s a sense of optimism.... That’s not saying there aren’t any clouds in the horizon — there are — but people are feeling a little bit better.”
Results are based on sales at stores open at least a year, which are considered an important measure of a retailer’s health because it excludes the effect of store openings and closings.
As the economy continues to get back on track, consumers have been hitting the stores more frequently and are more willing to buy discretionary items, analysts said. Pent-up demand has also helped drive business.
At the South Bay Galleria in Redondo Beach this week, Tatiana Danelo said she had avoided the mall during the recession. But she said that a few months ago, after her husband’s job as a longshoreman became more stable and his previously cut hours were reinstated, she began feeling more confident.
While shopping for a birthday gift for her husband, the 27-year-old from San Pedro also made some impulse purchases for herself, snatching up a dress and tank top.
“I have let loose, a lot,” Danelo said. “Usually I get in, buy what I need and get out — nothing extra. Now, I’m walking around, trying things on and if I like it, I’m buying it.”
Although she was also shopping at the mall, Virginia Saenz, a nurse from Lawndale, said she’s become increasingly anxious about rising food costs and high gas prices, which could threaten to reduce consumer spending in the coming months.
So Saenz, 28, said she was mainly shopping the sales racks and looking for deals.
“I love to shop, but now I only do it if I really have to,” she said.
Weaker performers last month included Gap Inc., which saw sales fall 3%, worse than analysts had expected. The San Francisco-based apparel giant — parent of the Gap, Banana Republic and Old Navy brands — noted that February represents a relatively small part of its overall revenue.
Teen chain Hot Topic Inc. of City of Industry said its sales declined 1.4%.
Notably absent from Thomson Reuters’ report Thursday were teen chains Abercrombie & Fitch Co., American Eagle Outfitters Inc. and Aeropostale Inc. Following in the footsteps of other retailers, including Wal-Mart Stores Inc., the three companies recently announced they would no longer report sales on a monthly basis.
Times staff writer Tom Petruno contributed to this report.
