Story URL:
Story Retrieval Date: 11/24/2014 4:22:38 PM CST

Top Stories

Double-digit declines plague most retailers in January

by Deb Weinstein
Feb 05, 2009



Sales for January 2009 compared with period ending Feb 1 or 2, 2008.

Despite a few bright spots like Wal-Mart, Target, and teen apparel chain Aeropostale, retailers faced yet another month of dismal sales in January, tallying a 1.6-percent loss overall, according to the International Council of Shopping Centers.

"January sales were slightly better than anticipated, but still continued to be weak overall, marking the fourth consecutive month of year-over-year declines for retail sales," said Michael P. Niemira, ICSC chief economist and director of research.

Niemera said wholesale clubs were the strongest performers in January, garnering a 3.7 percent gain, while discounters gained traction with an increase of 1.1 percent, their best since August 2008.

Wal-Mart Stores Inc. topped the list of winners, posting a 6 percent increase in January sales in its Wal-Mart stores, compared to the same period last year. Same-store sales rose 2.1 percent.

“Our sales results were driven by a continuation of gains in customer traffic” especially in grocery and health-and-wellness, said Vice-Chairman Eduardo Castro-Wright in a company statement.

Target Corp. saw sales increase 0.8 percent last month, with same-store sales falling 3.3 percent in January, compared to the 1.1 percent drop for the same period last year. Gregg Steinhafel, Target’s chairman, president and CEO, said in a statement that sales were, “in line with our planned range for this month.”

Aeropostale Inc., was an anomaly on the retail front. The teen chain saw sales rise 13 percent in January. Same-store sales increased 11 percent for the month, compared with a 5 percent gain during the same period last year.

MKM Partners LLC analyst Linda Tsai said Aeropostale’s jump is the result of overlapping trends: The company’s focus on quality and a consumer focus on price.

“[Aeropostale] represents a trade-down from more expensive competitors like American Eagle and Abercrombie & Fitch, and they have also tried to improve their merchandise relative to their history so it has allowed them to turn their own inventory,” she said.

These standouts aside, January battered most retailers.

TJX Companies Inc., parent of discount stores T.J. Maxx, Marshalls, HomeGoods, and A.J. Wright stores in the U.S. saw overall sales drop 6 percent last month, while same-store sales fell 4 percent from the same period last year.

For Plano, Texas, retailer J.C. Penny Company Inc., sales plummeted 15.5 percent for the four-week period ended Jan. 31, while same-store sales fell 16.4 percent.

The teen-to-young adult market also took a hit, with sales for Abercrombie & Fitch, parent of Abercrombie & Fitch, Hollister Co., Ruehl, and Gilly Hicks stores, skidding 13 percent in January. Same-store sales fell 20 percent.

Clothing and personal care retailer Limited Brands Inc., saw same-store sales slide 9 percent for the four weeks ended Jan. 31. This drop, according to the company’s pre-recorded statement, was even greater than expected.

The company’s Victoria’s Secret stores saw same-store sales fall 15 percent for the four-week period, noting that stores kicked off the semi-annual sale four days earlier, pushing the start into December rather than January. Further contributing to the slump: Reduced prices to offload merchandise.

The company said its Bath & Body Works division performed above expectations, with flat same-store sales, “driven by favorable customer response to our semi-annual sale offers and assortments.” Margins narrowed because of promotions and markdowns.

Morningstar analyst Brady Lemos said he expected worse results from Limited Brands.

“We think its operating margin for the whole year will be about 10 percent. We would consider that to be very healthy despite the pretty terrible environment,” he said.

ICSC's Niemira said he sees sales continuing to drag, calling "2009 a transition for retailers," and said ICSC expects sales to remain down for the first half of the year, and depressed by 1 to 2 percent in February.