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Retail chains' sales rise
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February 7, 2002: 12:05 p.m. ET
Many benefit from January clearances sales though some post declines.
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NEW YORK (CNN/Money) - Many of the nation's biggest retailers reported higher sales in January as they continued to heavily discount leftover holiday-season merchandise to make room for the spring and summer selling season.
Wal-Mart Stores Inc., J.C. Penney Co., Kohl's Corp., Saks Inc. and May Department Stores all reported higher January sales at stores open at least a year, a key industry gauge known as same-store sales, with Wal-Mart posting an 8.3 percent jump and Penney up 5.9 percent.
Several companies also used the opportunity to update fourth-quarter guidance, with Target Corp. raising expectations and Gap and Talbots reaffirming earlier guidance.
Meanwhile, Federated Department Stores (FD: down $0.88 to $38.36, Research, Estimates), operator of Macy's and Bloomingdale's, reported an 8.8 percent drop in January same-store sales.
January typically is a slow month, and retailers use the lull between the holidays and the spring selling season to clear out any remaining holiday inventory.
However, discount chains such as Wal-Mart and Target have been grabbing market share steadily from traditional department stores in the last year as consumers turned increasingly cautious while the economy slipped into recession.
"Despite the fact that it's a clearance month, we can still see strong trends. People stayed away from department stores and they broke down the doors at discount stores," said Kurt Barnard, president of Barnard's Retail Consulting Group.
Though consumer confidence is showing signs of bouncing back and economists generally believe the recession is close to, if not already, over, Americans are continuing to shift their dollars to discount chains, a move that has some analysts concerned about the future of traditional department stores and specialty shops.
"There has been, and continues to be, a strong shift of consumer spending away from traditional department stores and specialty stores over to discount stores," Barnard said.
Wal-Mart, the world's biggest retailer, said its January same-store sales rose 8.3 percent, but it also posted a whopping $219 billion in net sales for the past 52 weeks, far exceeding the $37 billion in annual sales of Kmart (KM: up $0.04 to $0.98, Research, Estimates), its nearest competitor, which filed for bankruptcy last month.
Same-store sales at the company's core Wal-Mart division increased 8.6 percent for the month, while sales at its Sam's Club wholesale division jumped 7 percent.
Target Corp. (TGT: up $0.37 to $42.87, Research, Estimates) posted a 5.8 percent increase in its January same-store sales and raised fourth-quarter earnings guidance to 72 cents a share, compared with Wall Street estimates of 67 cents, according to earnings tracker First Call.
While department-store sales at J.C. Penney (JCP: Research, Estimates) rose 5.9 percent, same-store sales at its Eckerd drugstore division jumped 7.1 percent, with front-end sales, or sales of everyday items, showing a modest rise after taking criticism on Wall Street for negative results.
Sears, Roebuck & Co. (S: up $0.12 to $51.95, Research, Estimates) reported a 2.3 percent decline in January same-store sales, which CEO Alan Lacy attributed to a decrease in promotional activity, reflecting efforts at reducing inventory.
Kohl's Corp. (KSS: up $0.83 to $67.91, Research, Estimates), a moderately priced department store chain, reported an 11.5 percent increase in its January same-store sales.
And Saks Inc. (SKS: up $0.28 to $10.07, Research, Estimates) reported a 2.1 percent rise in same-store sales.
May (MAY: down $0.44 to $34.89, Research, Estimates) Department Stores, operator of Lord & Taylor, Hecht's, Filene's and others, said same-store sales tumbled 10.7 percent.
Federated Department Stores, which announced last month that it plans to sell its Fingerhut catalog unit, said full-year same-store sales declined in part because of the downsizing of Fingerhut and the closing of its Stern's department store division.
Meanwhile, Gap Inc. (GPS: up $0.40 to $13.30, Research, Estimates), the troubled specialty apparel chain, said January same-store sales plunged 16 percent from a year earlier. The company said sales at its domestic Gap stores led the declines with a 22 percent drop, and that same-store sales also fell at its Old Navy and Banana Republic divisions.
The company, which has repeatedly missed on fashion trends of late and alienated its core customers, said it anticipates a fourth-quarter loss of 3 cents to 5 cents a share, which is in line with previous guidance in December, when Gap posted an 11 percent drop in same-store sales.
Meanwhile specialty retailers, which also have been squeezed by discount chains, posted mixed results for the period. Upscale women's apparel retailer Talbots Inc. (TLB: down $0.60 to $33.40, Research, Estimates) said January same-store sales increased 7.7 percent, largely on the strength of clearance discounting. Fourth-quarter sales, which include the crucial holiday season, dipped 5.5 percent.
Additionally, the Hingham, Mass.-based chain also said it remains comfortable with earlier guidance for a fourth-quarter profit of 52 cents to 54 cents a share.
Limited Inc. (LTD: up $0.28 to $16.72, Research, Estimates), the owner of Limited, Express, Lerner New York and Structure, said January same-store sales increased 6 percent, but that sales for the 13-week quarter, including the holidays, fell 2 percent from a year earlier.
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The company said Wednesday it plans to acquire the remaining shares of Intimate Brands Inc. that it does not already own. Intimate Brands (IBI: up $0.35 to $18.03, Research, Estimates) operates Victoria's Secret and Bath and Body Works. Intimate Brands reported a 7 percent increase in January same-store sales.
Bebe Stores (BEBE: down $0.36 to $20.64, Research, Estimates), another women's apparel chain, said January same-store sales tumbled 17.1 percent
Home furnishings retailer Pier 1 Imports (PIR: down $0.13 to $17.01, Research, Estimates) said same-store sales rose 5.5 percent, while Michaels Stores (MIK: down $0.15 to $32.48, Research, Estimates) saw same-store sales jump 8 percent, and The Children's Place said sales fell 7 percent in the month. 
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