Friday, March 5, 2004

Consumer confidence boosts retail for 3rd straight month

By Anne D'Innocenzio
The Associated Press

NEW YORK - 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," analyst Todd D. Slater at Lazard Freres & Co. said. "They are more upbeat about their jobs. They have more liquidity, and they're much more compelled by the fashion offerings."

Cincinnati-based Federated Department Stores Inc.'s 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."

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 miniskirts and tailored looks.

Slater said new lines such as 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."

Limited Brands posted a 5 percent increase in same-store sales, compared to analysts' 3.6 percent forecast.

At AnnTaylor Stores Corp., same-store sales were up 15.3 percent, much better than the 4.5 percent Wall Street projected.

Upscale stores such as Nordstrom, Saks and Neiman Marcus again reported strong sales.

Nordstrom posted an 8.8 percent increase in same-store sales, exceeding a 7.1 percent forecast.

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