Retail sales mostly solid in January
The nation’s largest specialty apparel retailer, Gap Inc., mired in an extended sales slump, staunched its losing streak in January as retailers Thursday reported solid sales.
Some retailers cited January’s cold snap as a sales booster. But Quiksilver Inc. said an unseasonably warm winter and poor snow conditions in the U.S. and Europe had a decidedly different effect on its sale of ski gear.
As a result, the Huntington Beach company cut its earnings projections for the year Thursday and saw its shares slide almost 11% in after-hours trading.
Major retail chains said sales at stores open a year or more rose 3.7% to $59.6 billion in January as shoppers redeemed gift cards and winter clothes started looking more appealing with falling temperatures. That was lower than the 5.1% gain of January 2006 but better than the 3% expected.
“It does tell us that the consumer is very much alive as we enter 2007,” said Michael Niemira, chief economist for the International Council of Shopping Centers, a trade association that polled the 52 chains.
Wal-Mart Stores Inc., the world’s largest retailer, reported a slightly better-than-expected 2.2% increase.
Economists caution that retail sales are likely to slow, at least slightly, this year as job and income growth ebbs and the weakness in the housing market plays itself out.
Niemira expects same-store sales to rise 3% in fiscal 2007, compared with 3.6% in the previous year.
Department stores turned in strong results in January, particularly upscale chains such as Nordstrom Inc. and Saks Inc. They both reported that sales at stores open a year or more rose more than 11%, higher than Wall Street had expected.
One of the bigger surprises came from San Francisco-based Gap, which operates more than 3,100 Gap, Old Navy and Banana Republic stores. The retailer said sales at stores open a year or more were flat in January. Analysts had expected a 7% drop.
Gap hasn’t logged a same-store sales gain since January 2006, when sales nudged up 1%. These comparable sales have been flat or fallen in 30 of the last 32 months.
Its two biggest chains continued to struggle in January. Gap North American fell 6% and Old Navy slipped 1%. Banana Republic saved the month by logging a 14% increase, much higher than the 2.2% that analysts had expected.
Gap now predicts per-share earnings of 89 cents to 91 cents for the fiscal year. Analysts were expecting 85 cents. Gap’s shares rose 50 cents to $19.75.
The company also said Thursday that Charlotte Neuville, head designer for Gap North America, was leaving the company. She trails former Chief Executive Paul Pressler, who left last month, and former Gap North America President Cynthia Harriss.
Two local teen retailers once again turned in downbeat performances this week. Anaheim-based Pacific Sunwear of California Inc. said its sales fell 7.7%, compared with the 5.3% anticipated, and Hot Topic Inc. in the City of Industry posted a 6.6% drop, a result that was slightly worse than expected.
Los Angeles-based Guess Inc. stopped releasing monthly sales figures, but same-store sales will be released quarterly.
Guess also said the Securities and Exchange Commission had terminated its investigation into company President Carlos Alberini.
The commission had notified the company earlier that it was considering filing civil charges against Alberini related to his tenure at Footstar Inc., where he was chief financial officer before signing on with Guess.
Quiksilver, which owns the Rossignol brand of ski equipment, said the season’s weather hurt the sale of skis, boots, bindings and poles. But the rest of the business is “performing at a high level,” Chief Executive Robert B. McKnight Jr. said.
The company now expects first-quarter earnings of 4 cents a share, less than half the 9 cents that analysts were expecting. For the year, it expects 75 to 78 cents a share, compared with the 91 cents that was anticipated.
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Begin text of infobox
Better than expected
Year-over-year percentage change in January sales at stores open at least a year
*--* Company %change Neiman Marcus +11.3% Nordstrom +11.1 Limited Brands +11.0 Federated +8.6 Target +5.1 J.C. Penney +3.6 Wet Seal +3.6 Wal-Mart +2.2 Ross +2.0 Bebe +1.9 Gap 0 Hot Topic -6.6 Pacific Sunwear -7.7 Sharper Image -25.0
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Sources: Times research, company reports
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