updated 3/3/2005 12:27:57 PM ET 2005-03-03T17:27:57

Despite a spike in oil prices and stormy weather in the Northeast and Midwest, consumers extended their shopping spree into February, handing retailers better-than-expected sales for the month. New spring fashions and bigger tax refunds helped boost spending.

Major Market Indices

As merchants reported their results Thursday, a broad range of companies beat Wall Street sales forecasts, including Wal-Mart Stores Inc., Target Corp., J.C. Penney Co. Inc., Nordstrom Inc., Talbots Inc. and teen retailers such as Abercrombie & Fitch Inc.

Among the few disappointments were Limited Brands Inc. and May Department Stores Co., which announced Monday that it was being acquired by Federated Department Stores Inc.

“The final February tally is very robust,” said Ken Perkins, retail analyst at RetailMetrics LLC., a research firm in Swampscott, Mass. “The strength was across all retail categories. The economy appears stronger than initially expected. And consumers are responding to spring fashions, despite the cold weather snap.”

Incentives
Consumers’ tax refunds, which on average are larger than a year ago, are giving consumers an added incentive to spend. Stores, particularly discounters, also benefited from the timing of the Super Bowl, which was played in February this year, after being held in January in 2004.

The International Council of Shopping Centers-UBS sales preliminary tally of 52 stores rose 4.4 percent, much better than the 3.3 percent increase it had projected. The tally is based on same-store sales, which are sales at stores opened at least a year, considered the best indicator of a retailer’s health.

The strong February results came on top of a 6.7 percent gain in the year-ago period. In January, the nation’s retailers reported a solid 3.6 percent increase.

Analysts noted that the surge in oil prices last month appeared not to dampen spending in February, but they are still concerned about the impact that higher energy costs could have in March and beyond.

The upbeat sales reports coincided with the Labor Department’s report that the number of Americans filing first-time claims for unemployment benefits fell by 1,000 last week to a seasonally adjusted 310,000. The declining level of jobless claims provided a strong indication that the labor market is continuing to improve.

February — which offers a last chance for stores to clear out winter merchandise and marks the big introduction of spring apparel — is the second least important month of the year, behind January. Still, February’s strong results offer encouragement to retailers as they move into the heart of the spring selling season.

Wal-Mart reported a 4.1 percent increase in same-store sales, surpassing the estimates of analysts surveyed by Thomson First Call; they had forecast a 3.7 percent gain. Total sales rose 10.9 percent.

Target said same-store sales rose 9.0 percent, exceeding the 6.4 percent estimate. Total sales rose 16.1 percent.

TJX Cos. reported a 6 percent gain in same-store sales, better than the 5.1 percent Wall Street expected. Total sales rose 12 percent.

The department store sector also had a solid month, with luxury retailers again reporting the biggest gains.

Nordstrom Inc. had a 7.0 percent increase, well exceeding the 3.7 percent Wall Street estimate. Total sales rose 8.4 percent.

Neiman Marcus Group Inc. said Wednesday it had a 7.7 percent gain in same-store sales, better than the 5.5 percent forecast. Total sales rose 6.5 percent.

Penney had a 6.1 percent gain in same-store sales in its department store business, better than the 4.3 percent projection. Total sales rose 6.6 percent.

Federated had a 1.8 percent gain in same-store sales, better than the 0.5 percent decline Wall Street expected. Total sales rose 1.6 percent.

Sears’ same-store sales in its domestic business rose 1.3 percent, surpassing the 0.4 percent estimate from Wall Street. Total sales rose 2.2 percent.

But May suffered a 4.1 percent decline in same-store sales, worse than the 2.7 percent Wall Street anticipated. Total sales rose 14.5 percent.

Talbots had an 8.1 percent gain in same-store sales, surpassing Wall Street’s 2 percent estimate. Total sales rose 13 percent.

“Our performance was driven primarily by strength in regular-price selling of our early spring merchandise,” Talbots CEO Arnold B. Zetcher said in a statement.

Meanwhile, Gap Inc. had a 3 percent decline in same-store sales, though that was better than the 4 percent drop Wall Street expected. Total sales were unchanged.

Limited suffered a 4 percent decline in same-store sales, worse than the 1.3 percent forecast. Total sales fell 0.6 percent.

AnnTaylor Stores Corp. had a 5.4 percent decline in same-store sales, though that was better than the 7.0 percent forecast. Total sales rose 6.7 percent.

Teen retailers had a solid performance.

Abercrombie & Fitch posted a 19.0 percent gain in same-store sales in February, well past the 8.6 percent projection. Total sales rose 33 percent.

American Eagle Outfitters Inc. said Wednesday same-store sales soared 32.4 percent, beating the 12.9 percent estimate. Total sales rose 37.4 percent.

Also on Wednesday, Aeropostale Inc. said same-store sales rose 13.4 percent, exceeding the 1.9 percent forecast. Total sales rose 37.8 percent.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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