Retailers report upbeat sales in February

updated 12:27 p.m. ET March 3, 2005

NEW YORK - 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.

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.

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