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Retailers enjoy a blowout month
Wal-Mart beats estimates; department store, luxury and apparel sales boosted by weather, fashions.
March 5, 2004: 7:06 AM EST
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - U.S retail chains on Thursday posted surprisingly strong sales numbers for February, boosted by warmer weather, tax refunds and growing confidence in the state of the economy.

"We've finally got a great February. The first set of numbers indicates that this was a blowout month with the kind of sales gains that we haven't seen in a while," said Ken Perkins, retail analyst with Thomson Financial.

Added Perkins, "The impressive part is that it's not just the luxury names posting strong numbers. The big numbers are coming in for the department stores and apparel names as well."

While it's true that retailers are also benefiting from easier comparisons a year ago, Perkins says he's certain there's much more going on.

"This point last year, the Iraq war certainly did hurt consumer spending," said Perkins. "Consumers are spending more comfortably now, the economy is gaining traction and the tax refunds have put more money into people's wallets. Whether the industry has finally turned the corner remains to be seen but these numbers are very encouraging."

Wal-Mart Stores Inc. (WMT: Research, Estimates), the world's largest retailer, reported February sales that beat its previous guidance for the month, boosted by strong demand for clothes.

The retailer said sales at stores open at least a year, a closely watched retail measure known as same-store sales, rose 6.2 percent in the four-week period ended Feb. 27, compared to its previous guidance of a 3 to 5 percent sales gain for the period.

Net sales for the month rose 14 percent to $20.2 billion, up from $17.6 billion a year earlier.

In a pre-recorded sales message, Wal-Mart said the retailer benefited from easier comparisons in 2003 when sales took a hit from snow storms over the President's Day weekend. Men's, women's and girls' apparel were among the strong performing categories for the month.

For March, Wal-Mart said it expects comparable sales to be up in the 4 to 6 percent range.

Separately, discounter Target Corp. (TGT: Research, Estimates)'s sales rose 7.5 percent at its stores open at least a year.

Department store chain J.C. Penney (JCP: Research, Estimates) was a surprise winner, after logging same-store sales at its department stores up 12.1 percent for the month. The result solidly trounced analysts' estimates of a 3.6 percent gain.

Consumers also continued their love affair with luxury goods. High-end department store chain Neiman Marcus (NMGA: Research, Estimates)'s sales jumped 24.4 percent, while Saks Inc. (SKS: Research, Estimates) reported sales up a strong 15 percent.

Industry watchers said clothing stores benefited from new spring fashions.

Sales at Gap Inc. (GPS: Research, Estimates), the No.1 apparel retailer, rose 12 percent, while Talbots (TLB: Research, Estimates) took in a 5.8 percent gain for the month. Limited Brands (LTD: Research, Estimates), whose chains include Victoria's Secret and Express, said sales rose 5 percent for the month.


Among the teen apparel retailers, Hot Topic (HOTT: Research, Estimates), whose sales also have been on fire, said same-store sales last month rose 7.6 percent. American Eagle Outfitters (AEOS: Research, Estimates) posted a 15 percent sales gain last month.

Delos Smith, economist with the Conference Board, agreed with Perkins that consumers are much more "relaxed" and enjoying the extra cash from tax refunds. At the same time, he's discounting February's performance to an extent. "The economy will be very stimulative up to the elections. Essentially, it's an economy on steroids. This is good for consumer sentiment. Combine that will the impact of tax refunds and we will continue to see strong retail numbers."  Top of page

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