February Retail Sales: Not So Gray After All

So it wasn't that bad after all.

AP

With widespread fears of a possible recession, rising gasoline and food prices, and bad winter weather, analysts were expecting retailers to post another round of dismal sales in February. However, many retailers have managed to outpace these estimates, which had called for the worst February in five years.

Still, consumers went back to the stores and malls cautiously, looking for big markdowns and largely sticking to necessities. Sales of apparel and furnitures were particularly weak.

"This is giving a glimmer of hope to retailers," said Ken Perkins, president of RetailMetrics, a research company in Swampsott, Mass. "Results are coming in better than expected. But certainly, consumers are not knocking down the doors."

According to Thomson Financial, 60 percent have topped estimates, while 40 percent have fallen short.

Discounters like Wal-Mart Stores appear to be better placed as consumers tighten their belts. Wal-Mart, as well as warehouse club stores Costco and B.J. Wholesale all reported stronger-than-expected sales in February.

Wal-Mart, the world's largest retailer, said its U.S. same-store sales in February rose 2.6 percent, excluding fuel. Including fuel, the company's same-store sales rose 3 percent for the four-week period ended Feb. 29.

According to Thomson Financial, analysts, on average, were calling for same-store sales to rise 1.1 percent during the period.

The Dow component attributed the better than expected same-store sales to continued strength in its grocery, health and wellness and entertainment U.S. business segments as well as relative improvement in sales trends for apparel.

Wal-Mart also said key product categories such as food, flat-panel TVs, digital audio, video games and the pharmacy posted strong sales in February while Valentine's Day seasonal products also did well.

The company said it expects same-store sales, excluding fuel, for the five-week March period to come in between flat and up 2%.

"With consumers increasingly concerned about their personal financial status and a higher cost of living, we will continue our commitment to price leadership across all categories," said Tom Schoewe, the company's chief financial officer.

Meanwhile, rival Target said its sales rose 0.5 percent, which was in line with its forecasted range, but higher than analysts were expecting.

"I think overall, when we look at the month of February, a little more than half of the month of February is devoted to discounts, clearing out the winter goods and making room for the arrival of transitional merchandise," said Dana Telsey, chief research officer at the Telsey Advisory Group. "That discounted merchandise did move. Children's business has been strong for a while, and Children's Place just continued that trend."

Children's Place said its sales rose 5 percent from a year ago, topping estimates that had called for an increase of 3 percent, according to Thomson.

CONTINUED: Weakness at Apparel, Department Stores

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