Retailing: Same-Store Sales See Wide Gains

Many retailers blew past analysts’ February expectations. Can the trend continue?

   

Who knows — maybe it was all those Valentine’s Day and Presidents’ Day promotions, or improving consumer confidence. It’s entirely possibly that unseasonably warm temperatures ignited a bit of the shopping bug in many of us. Whatever the reason, retailers reaped the rewards.

Of the retailers that announced February same-store sales today (or earlier this week),  over 80% came out ahead of analysts’ estimates.

One of the sector’s biggest winners is Gap (NYSE:GPS) (and the call buyers who traded it yesterday). The apparel retailer said sales climbed 4% last month after analysts had targeted a 1.4% drop. The stock has rallied nearly 8% today.

Also up 8% today is The Buckle (NYSE:BKE), which screamed past analysts’ estimates with a same-store sales jump of 14.8%, versus estimates of a 5.8% gain. Other names issuing positive surprises included The Limited (NYSE:LTD), with an 8% gain, versus a 6.2% estimate, and Target (NYSE:TGT), which saw sales grow 7%, versus an expected 5.2% rise. Both of these stocks are virtually unchanged, so perhaps investors were hoping for a more dramatic upside surprise.

Among the few names that missed analysts’ estimates was Kohl’s (NYSE:KSS), which reported an 0.8% drop in February sales. Analysts were expecting results to be flat. KSS is trading about 1.5% lower today.

But what’s a market story without caveats? Here they are: Rising gas prices could quickly curb discretionary spending. Unemployment worries could push to the fore again. And who knows — maybe spring fashion trends won’t be all that appealing.

Finally, fewer and fewer retailers even report monthly results, so today’s modest flurry of positive surprises might not even have a broad impact. A decade ago, one could expect to hear monthly results from more than 100 retailers on the first Thursday of every month. These days, it’s closer to 25.

J.C. Penney (NYSE:JCP) and Dillard’s (NYSE:DDS) both threw in the towel last month, with the latter noting that quarterly reports offer “a more complete representation of the company’s performance.” JCP is among the few retailing names that is trading in the red, down 1.9%. DDS is lower as well, off 0.5%.

Wal-Mart Weighs In

Another name that has given up monthly reporting is Wal-Mart (NYSE:WMT), which shifted to a quarterly reporting schedule almost three years ago. But perhaps the chain was missing the spotlight because company officials chose today to lift WMT’s dividend by 9%. The move was largely expected since the company has increased its dividend every year since it was established in 1974. In midday trading, the shares were fractionally lower.

The retailing giant’s quarterly dividend is now up to 39.75 cents per share (that’s $1.59 annually, or so my calculator tells me). The next payout is on April 4 for shareholders of record on March 12.

As of this writing, Beth Gaston Moon does not own any shares mentioned here.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/retailing-same-store-sales-see-wide-gains/.

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