Wal-Mart Sales in Jan. Below Expectations
Wal-Mart Sales in Jan. Below Expectations
Feb. 06, 2003
NEW YORK (AP) _ The nation's retailers contended once more with a difficult sales climate during January, although they were able to clear out holiday leftovers thanks to deep discounts and frigid temperatures.
As storeowners reported their January results Thursday, the extent of their troubles was reflected in the performance of Wal-Mart Stores Inc., usually the industry leader. The discounter said its sales at stores open at least year, known as same-store sales, came in below Wall Street forecasts.
Meanwhile, department stores and mall-based apparel chains again stalled with companies including Federated Department Stores Inc., and Saks Inc. posting same-store sales declines.
But Gap Inc. continued its turnaround with a double-digit gain in same-store sales, far better than the mid-single digit increase Wall Street expected. Same-store sales are considered the best gauge of a retailer's strength.
``January was marginally better than the prior month. But we are still locked in the same perspective,'' said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. He added that war with Iraq is a ``near-term potential and it makes for an iffy environment.''
The bank's same-store sales tally of 78 retailers was up 1.8 percent for the month, compared to a 1.0 percent increase in December. The January performance was slightly higher than Niemira's forecast for a 1.5 percent gain.
Kurt Barnard, president of Barnard's Retail Trend Report, based in Montclair, N.J., said the upside was that ``stores were effective in getting rid of the overhang of merchandise to the benefit of consumers who saw very low prices.''
``Consumers are still willing to buy so long is the product is a real bargain,'' Barnard continued. ``The economy continues to be sluggish, with productivity down and failure of hiring to take place. Unemployment remains a serious problem, particularly for retailers.''
A report from the Labor Department underscored the weak environment, reporting that productivity of U.S. companies dipped at an annual rate of 0.2 percent in the final quarter of 2002, the worst performance in more than a year.
The Labor Department also said new claims for unemployment benefits fell last week by a seasonally adjusted 11,000 to 391,000. But while the pace of layoffs may be stabilizing, the job market continues to be sluggish.
January is the least important month of the year for retailers as stores seek to clear out holiday inventory. Niemira and others looking at February as a better barometer of consumer spending.
Still, a sluggish retail trend is expected to continue. In fact, while discount retailers continue to outperform apparel and department stores, their monthly sales increases have waned.
Wal-Mart posted a 2.3 percent same-store sales increase in January, below analysts' forecast for a 3 percent gain. Total sales were up 12.9 percent. The company said cold weather boosted sales of winter merchandise, though sales slackened during the last week of the month.
Still, the company raised its earnings forecast to $1.80 per share for its fiscal year. Its previous goal was to achieve $1.76 per share to $1.78 per share. Analysts polled by Thomson Financial expect $1.78 per share.
Target Corp. had a 0.4 percent decrease in same-store sales, below analysts' forecasts for a 0.01 percent increase. Total sales were up 7.7 percent.
Kohl's Corp. reported a 5.5 percent increase, beating Wall Street estimates of a 4.4 percent increase, but still modest compared with earlier double-digit gains. Total sales were up 22.1 percent.
Here are selected same-store sales for January for other leading retailers:
_Federated, same-store sales were down 1.2 percent; total sales were up 0.2 percent.
_Gap, same-store sales were up 16 percent; total sales were up 24 percent.
_J.C. Penney Co. Inc., same-store sales for department stores were down 3.8 percent; total sales were down 2.8 percent.
_Saks, same-store sales were down 2.1 percent; total sales were down 1.9 percent.
_Sears, Roebuck and Co., same-store sales decreased 8 percent; total sales were down 6.3 percent.
_TJX Cos., same-store sales were down 2 percent; total sales were up 7 percent.