Another month, another sales disaster

Several retail chains reported steep drops in January store sales. But Wal-Mart sees some relief at its discount stores.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Parija B. Kavilanz, senior writer

What do you think of Obama's crackdown on bank CEO pay?
  • It will force banks to act more responsibly
  • It's unwarranted interference in business
  • It will make no difference

NEW YORK ( -- Sales at leading chain stores were caught in a deep freeze in January as mounting concerns about job security kept more shoppers away from the mall.

With the exception of discounter Wal-Mart and a handful of specialty chains, other retailers suffered big declines in their January same-store sales reports unveiled Thursday.

Same-store sales, or sales at stores open at least a year, are a key indicator of a retailer's overall health.

Sales tracker Thomson Reuters said overall January same-store sales for a group of 35 retailers fell 1.8%, compared to a slight gain of 0.4% logged a year ago.

It was the second-weakest monthly performance for the group since the firm first started tracking same-store sales estimates in 2000. Monthly sales fell 2.1% in November, which was the worst monthly performance Thomson Reuters has reported.

"Retail sales continued their downward slide in January as retailers and consumers are getting pounded by the deepest recession in decades," Ken Perkins, president of sales tracker Retail Metrics, wrote in a report.

"This is not a good time for retailers," said Craig Johnson, president of retail consulting group Customer Growth Partners. "If people are fearful for their jobs, they will tightly hold on to their money and not spend it. This [situation] makes it very difficult for retailers."

If store sales keep deteriorating, Johnson said more chains will find it hard to stay in business. "I think we'll see others go the way of Circuit City this year," he said, referring to the electronics retailer that is in the process of liquidating.

Wal-Mart Stores -- the world's biggest retailer - reported January sales that beat estimates, helped by strong sales of grocery and health products.

Given its low-price model, Wal-Mart continues to benefit as more recession-conscious consumers trade down to its value prices in groceries and other everyday necessities.

Wal-Mart (WMT, Fortune 500), the world's largest retailer, said its same-store sales rose 2.1% for the month.

Its own forecast was for sales to be flat to up 2% in January. Analysts had expected the retailer to post a 1.1% sales gain in the month.

The retailer said grocery, health and wellness, home and entertainment were the best performing categories in terms of sales last month.

"We are pleased that we exceeded our expectations for comparable store sales in January," Eduardo Castro-Wright, vice chairman of Wal-Mart Stores, said in a statement."Our sales results were driven by a continuation of gains in customer traffic.

However, citing the "volatile" sales environment, the retailer announced that it will no longer be issuing monthly same-store sales forecasts starting this month.

Instead, Wal-Mart said it will report a comparable sales outlook for a 13-week period. For the period ending May 1, Wal-Mart expects same-store sales to be up between 1% to 3%.

"We believe this guidance is a more appropriate measure for our investors, particularly in volatile times when consumer swings are more difficult to predict," Tom Schoewe, Wal-Mart's chief financial officer said in a statement.

But other discounters fared worse. Warehouse club operator Costco (COST, Fortune 500) said its monthly sales fell 2% in January.

Costco also warned that its second-quarter earnings will be "substantially below" Wall Street's estimates of 70 cents a share.

Target (TGT, Fortune 500) reported a 3.3% decline in its same-store sales last month.

A lot of pain in stores

Clothing and luxury sellers took a beating in January.

Same-store sales at Limited Brands (LTD, Fortune 500), owner of Victoria's Secret and Bath & Body Works chains, fell 9%. Teen clothing chain Pacific Sunwear logged an 11% drop in its monthly sales.

Gap (GPS, Fortune 500)., the No. 1 clothing chain, posted a stunning 23% decline in its January same-store sales compared with a 2% decline for the same period a year ago. Analysts' expectations were for a 15.4% drop.

However, the retailer raised its full-year profit forecast, citing cost savings in January.

Specialty chain Abercrombie & Fitch said its sales fell 20% last month, while sales at women's clothier Chico's fell tumbled 10.9%.

High-end department store chain Nordstrom reported an 11.4% same-store decline.

Amid the widespread disappointments, there were still a few bright spots.

Specialty chain Hot Topic continued its positive sales streak, posting a sales increase of 6% last month. The Buckle, a seller of trendy denim and accessories, logged a strong 14.7% sales gain in its stores. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.