New York, NY, Mar. 5--Consumers' rising confidence gave the nation's retailers their third straight month of solid sales in February, with business above expectations at many retailers, including clothing and department stores.
Warmer weather, tax refunds, and more appealing spring fashions contributed to the upbeat results issued Thursday. February's performance followed a robust January performance and a better-than-expected holiday season.
"Consumers are definitely feeling better," said Todd D. Slater, an analyst at Lazard Freres & Co. "They are more upbeat about their jobs. They have more liquidity, and they're much more compelled by the fashion offerings."
Federated Department Stores Inc. chairman and CEO Terry J. Lundgren reported "underlying sales strength in key merchandise categories such as women's ready-to-wear, jewelry, handbags, shoes and cosmetics that is very encouraging for the spring season overall."
The International Council of Shopping Centers-UBS sales tally of about 70 retailers was up 6.7 percent from the year-ago period. That far exceeded the original forecast of 4 percent to 5 percent that had steadily been upgraded throughout the month. The tally is based on what the industry calls same-store sales, those from stores open at least a year. They are considered the best measure of a retailer's health.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, said the February performance marked the strongest year-over-year monthly increase since April 2000, when his tally was up 7.9 percent. The February results compared with a meager 0.9 percent gain from the year-ago period, hurt by a Presidents Day snowstorm.
Still, Niemira cautioned, the underlying demand is strong, but not as strong as the apparent number indicates. He said that excluding the weather factor, the monthly sales gain would have been "more like 5 to 5.5 percent."
The release of retailers' results coincided with a Labor Department report that the number of people filing new applications for unemployment benefits dropped last week. That's an indication companies may be feeling more confident about the strength of the economic recovery and less inclined to reduce their payrolls.
For the work week ended Feb. 28, new filings for jobless benefits fell by a seasonally adjusted 7,000 to 345,000, the lowest level in two weeks. The decline was a bit larger than the decrease of 5,000 some analysts expected.
Job worries have been a big concern among consumers, particularly the low- to middle-income earners. But Thursday's results indicated that this group is feeling better about their finances, although job growth has been relatively weak.
Wal-Mart Stores Inc., the world's largest retailer, announced a 6.2 percent gain in same-store sales in February, beating the 4.9 percent expected by analysts surveyed by Thomson First Call.
Target Corp., helped by strong sales at its discount division, had a 7.5 percent increase in same-store sales. Analysts expected a 5.7 percent increase.
Meanwhile, mall-based apparel stores and department stores enjoyed a strong performance. Analysts said department stores are benefiting from designers' latest new fashions, bright colors like hot pinks and citrus as well as mini skirts and tailored looks that have also helped spur sales.
Slater said new lines like Jones Apparel Group's Jones Signature and Tommy Hilfiger's "H" collection, both of which reached department stores in recent weeks, have "created new energy."
J.C. Penney Co. Inc. posted a 12.1 percent increase in same-store sales at its department stores, well exceeding the 5.6 percent Wall Street expected. The company said sales were strong across all merchandise divisions thanks to a strong response to Valentine's Day and Presidents Day store events.
At Sears, Roebuck and Co., same-store sales in its domestic business were up 1.1 percent. Analysts expected a 3.6 percent gain.
