Retail Sales Increase in February

February Retail Sales Jump 4 Percent

by Doug Desjardins

As expected, retail sales continued to climb in February despite rising gas prices and stormy weather in some parts of the country.

A Thomson Reuters poll of 25 retailers showed an average gain of 4.2 percent in February, slightly better than the 4% gain in 2009 and ahead of projections calling for a 3.6 percent increase. Analysts note that the 4.2 percent increase was made against relatively strong same-store sales in February 2009.

The retail channel that suffered most during the dark days of the recession – department stores – continued to lead the way. Saks reported a 15-percent jump in February same-store sales while Nordstrom reported a 7.3-percent increase, nearly doubling a projected gain of 4.2 percent. Following close behind was JC Penney with a 6.4-percent increase.

Apparel and home-furnishings retailer Kohl’s also turned in a strong same-store sales increase of 5 percent, easily beating expectations. Mass-merchant Target was at the low end of the sales increase, with a 1.8-percent jump in sales. And Gap Inc. reported a disappointing 3-percent decrease in sales during a month when it was expected to gain nearly 1 percent.

Membership clubs also fared well. Retailer B.J.’s Wholesale Club reported another strong showing with a sales increase of 7.5 percent in February, or 3.9 percent with gasoline sales excluded.

Despite the strong results, analysts warned of problems that may slow a retail recovery that began in summer of 2010.

“They (February sales) are not a firm confirmation that retailers will have a good spring or full year,” said Arnold Aronson, managing director at retail consultant Kurt Salmon. “We’re still dealing with chronic issues like high unemployment, high gas pump prices and, longer-term, the higher prices that will be passed on to the consumers because of the rising costs of cotton and other raw materials.”

Brian Sozzi, a retail analyst with Wall Street Strategies, said that rising consumer confidence and a willingness among consumers to spend more helped drive February sales but that the picture could change in the next few months. In a note to investors, he said that “all bets are off for March and April, the heart of the spring shopping season.”

Adding to the uncertainty is the prospect that retailers may start to raise prices again to offset rising commodity costs. Sozzi wrote that retailers are expected to pass on price increases “after a year of companies eating ticket increases from manufacturers.”

Nevertheless, analysts are predicting a good year for retail sales. The National Retail Federation’s Retail Sales Outlook report released in February calls for a 4-percent increase in sales of $2.47 trillion for 2011.

Resources

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Retailers Forecast 4 Percent Sales Growth in 2011