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Inside January's Surprisingly Strong Same-Store Sales Results

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Same-store sales came in surprisingly strong in January, rising year-over-year by just under 5.0 percent. The results surprised experts, especially because of the blast of big snowstorms in the Northeast and Southeast during the month.

A look into the numbers reveals surprising strength in the apparel sector, led by Limited's 24.0 percent year-over-year gain. As a whole, the apparel sector saw sales rise 7.3 percent, according to ICSC.

Wholesale clubs also did well—although that figure was helped some by gas sales. Costco's same-store sales rose 9.0 percent and Costco does sell gas at many of its stores. Wholesale clubs same-store sales rose 8.3 percent during the month, according to ICSC, but when you strip out gas the gain falls to 5.3 percent. With gas prices at their highest level in some time, fuel provided an added boost to same-store sales figures that was not due to any strength in discretionary spending. In fact, Costco alone is responsible for contributing 1.7 percentage points to the industry's overall gain for the month.

However, going forward, it looks like same-store sales figures will become an increasingly poor measure of what's going on with retailers.

Abercrombie & Fitch Co., Aeropostale Inc. and American Eagle Outfitters Inc. all announced that today will be the final time they report monthly same-store sales figures. That will drop the pool of retailers reporting to less than 30. The ones still reporting tend to be the stronger retailers.

A few years back, more than 70 firms reported. In recent years, more and more retailers have opted to stop relaying the figure, most notably Walmart, which last reported monthly same-store sales figures in 2009. Walmart is part of a group of retailers that now report quarterly while other retailers don't report same-store sales metrics at all. For its part, Walmart has posted quarterly declines in same-store sales for at least the last four straight quarters—including fuel sales. So if Walmart was still part of the equation—given how big a chunk of the retail world the firm represents—the same-store numbers would look a bit worse.

Going forward, as three more firms drop out of the mix, we'll have to take the same-store numbers with a large grain of salt.

My look inside the monthly reports is after the jump.

Kantar Retail and blog RetailSails recorded a 4.9 percent gain, while ICSC estimated that sales rose 4.8 percent. (I'm still waiting for Retail Metric's numbers.)

ICSC's tally shows that same-store sales rose 4.8 percent in January.

ICSC's numbers are based on 32 retailers.

In its monthly commentary, ICSC wrote:

“The January sales performance bested ICSC's forecast by several percentage points. Although retailers were impacted by storms in the Northeast and Southeast, in particular, strength across the board helped to lift overall industry sales to the strongest monthly gain since November's 5.4% year-over-year pace and finished the extended holiday season, fiscal quarter and fiscal year on a strong footing.

Costco's comp-store sales contributed 1.7 percentage points to the overall industry gain for January (some of which was due to higher gasoline prices). But still, the broad-based January sales gains—despite weather drags and even excluding some special positive factors—suggested relatively healthy underlying consumer demand. January comparable-store sales at apparel chains rose by 7.3%--which was dominated by the surge in Limited Brands, department stores posted a 2.5% gain, discounters showed a 1.8% rise, drug stores rose by 4.8% and wholesale clubs posted an 8.3% rise in total and 5.3% excluding the impact of fuel.

For the fiscal year ending January 2010, industry sales rose by 3.5%--the industry's strongest performance since 2006 (+4.8%). ICSC continues to forecast that U.S. industry comp-store sales will grow by 3.0-3.5% in FY2011 as a stronger pace of employment growth and more take-home pay (from

more jobs and lower payroll taxes) support a solid underlying pace of consumer demand during the year.

Here are ICSC's monthly same-store sales year-over-year changes, not seasonally adjusted, going back to 1993.

Click to enlarge.

icsc-same-store-sales-chg-0111

Here is ICSC's index of same-store sales, seasonally adjusted, going back to 1992.

Click to enlarge.

icsc-same-store-index-0111

According to Kantar Retail, sales-weighted same-store sales increased 4.9 percent in January for the 31 retailers that reported numbers (most of which were apparel retailers). (A pdf with each retailer's results can be downloaded here.) The results were led by stronger-than-average results at food, drug and mass retailers and apparel and accessory stores. Lagging were department stores.

Frank Badillo, senior economist at Retail Forward, said in a statement, “Shoppers are slowly becoming less cautious about their spending and that appears to be borne out by January's same-store sales results, especially when you factor out the negative impact of bad weather.”

In addition, Kantar Retail's ShopperScape survey showed that January sales numbers “continued to benefit from the turnaround in spending intentions that bolstered the holiday period.”

kantar_jan11_01

kantar_jan11_02

RetailSails, meanwhile, reported a 4.9 percent gain looking at 30 retailers.

Retailers reported extremely strong sales results for January this morning, even as most analysts were expecting the wintry weather to strongly hinder performance. In addition, it appears companies managed to limit promotional activity as several retailers raised fourth quarter and full year guidance.

The big winners were Limited Brands (+24% comp), Zumiez (+15.3%), Neiman Marcus (+9.8%) and Costco (+9%), while laggards included American Eagle Outfitters (-6%), Abercrombie & Fitch (-4%) and Hot Topic (-3.3%). 22 out of the 30 retailers reported same-store sales gains compared to 17 gainers last January.

Below is a summary of January and fiscal 2010 results by company and brand/segment. Click on the retailer pages on the right side of the page for details by company, and we will have more in-depth coverage later on today.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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