A Blizzard of Declines: Weather, War Worries Sink February Comps

February same-store sales came in below plan and, thanks to inclement weather for much of the month, below year-ago levels, too.

Dana Telsey, a retail analyst with Bear Stearns, said monthly sales finished in line with expectations that fell along with the snow.

"Positive sales won’t be apparent until April as Easter shifts to April 20 from March 31, but first-quarter results will probably be disappointing due to more promotions and weaker traffic as consumers are more focused on watching CNN than shopping," Telsey said.


Gap Inc. differentiated itself last month not just through its merchandising but also by reporting a comp increase. Its 8 percent rise marked its fifth consecutive month of comp increases as increased conversion and higher units per transaction offset continued declines in store traffic levels. By division, Gap comps grew 10 percent and Old Navy rose 8 percent, offset by a 3 percent drop at Banana Republic.

"Given the low consumer confidence levels and the extreme weather that occurred during February, we are pleased with the overall comp sales performance," a company spokeswoman said on a prerecorded call. "Our customers continue to respond favorably to our product."

While overall merchandise margins were slightly lower than last year, driven by increased markdown selling, she pointed out that markdown margins improved significantly over the prior year and that Gap entered February with markdown inventory levels comparable with last year’s and ended the month with markdown levels below year-ago marks.

Limited Brands reported a 1 percent comp decline, slightly below its expectations for a flat performance. Victoria’s Secret continued its domination, reporting a 5 percent comp increase, above expectations. However comps at Bath & Body Works were below expectations, falling 3 percent. Apparel comps fell 6 percent, with disappointing results at Express (down 7 percent) and Limited stores (down 4 percent). Women’s comps at Express were below expectations due to weakness in sweaters, woven pants and denim, while Limited saw softness in casual pants, sweaters and accessories. The company projected March comps to decrease 3 to 5 percent, impacted by the late Easter.

As reported, comps for youth retailing standouts Pacific Sunwear and Hot Topic rocked on last month, rising 14.8 and 4 percent, respectively. However, the Three A’s — Abercrombie & Fitch, American Eagle Outfitters and Aeropostale — comped down 4, 7.8 and 3.1 percent, respectively, and declines were even more precipitous at Bebe Stores (15.2 percent) and Wet Seal (31.5 percent).
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