The National Retail Federation (NRF) today responded to strong growth in several major economic indicators by raising its retail sales estimate for 2002.
NRF’s Retail Sales Outlook — which provides forecasts for a sales category that includes tenants commonly found at malls and shopping centers — predicted an annual increase of 6% compared to a previous estimate of 3.7%.
"The mini-recession we experienced in 2001 is over after one quarter of negative growth," said Rosalind Wells, NRF’s chief economist. "The recovery has begun, and it has come sooner and with more vigor than anticipated."
Credit the consumer
Factors contributing to the turnaround include strong consumer spending, an improving job market, robust home sales, and a more positive corporate outlook, Wells said.
Dr. Roger Tutterow, director of the Econometric Center at suburban Atlanta’s Kennesaw State University, said American consumers have been particularly helpful in the recovery by picking up the spending slack of corporate America, which largely halted capital investment during the downturn.
"It really hasn’t been that deep of a recession if you look at it in the broad sense," Tutterow said. "But if you focus on the stock market — where there’s a heavy reliance on capital spending in sectors such as technology and telecom — it looks a lot worse than the general economy."
It comes as no surprise that discount stores posted strong March results: Wal-Mart, for example, reported a 14.5% increase in net sales for March compared to the same five-week period in 2001. But both Wells and Tutterow said the ongoing recovery could also benefit specialty and apparel retailers.
"With the strengthening trend forecast for apparel sales this year, department stores ... have an opportunity to improve their performance," Wells said. "Specialty retailers, with the right merchandise and execution, can also attract consumers with superior service, focused assortments and convenience."
And there’s more good news on the retail front: The National Association of Realtors (NAR) this week projected that net absorption in the retail sector will rise from -12 million sq. ft. in first quarter 2002 to 26 million sq. ft. in the fourth quarter. NAR says net absorption should reach 146.6 million sq. ft. in 2003 — four times the level projected for this year.
Here is a snapshot of retailer financials for March:
-- Minneapolis-based Target Corp. today reported that its net retail sales in March increased by 16.2% compared to 2001. The retailer said its net sales amounted to $3.7 billion for the month compared to $3.2 billion in fiscal March 2001.
Target's total comp-store sales were up 9.4% for the month and 9.7% for the year-to-date. Chairman and CEO Bob Ulrich said in a statement that Target expects to outperform prior EPS expectations for the quarter.
-- J. Crew Group today reported its March revenues were $58.9 million — unchanged from March of last year.
But J. Crew's comp-store sales for the retail division decreased 11.2% in March, and net sales for its catalog division decreased 6.9%.
In a statement, Mark Sarvary, CEO, called the response to the company's spring assortments "mixed, with strong performance in woven shirts offset by continuing weakness in our sweater business. "We are on track to achieve our previously stated expectation of breakeven EBITDA for the first quarter of 2002, which is approximately flat versus last year."
-- Ross Stores today reported sales of $329 million for March, a 21% compared to the same period in 2001. The retailer said its comp-store sales for the month rose 11% over the prior year, which it called "significantly ahead of plan."
For the nine weeks ended April 6, sales totaled $556 million, a 23% increase above the $453 million recorded for the same period last year. Comp-store sales for the nine weeks grew a robust 12% over the prior year, the retailer said.
-- The Limited reported a comp-store sales increase of 9% for March compared to the prior year.
Net sales were $784.3 million, an increase of 12% compared to adjusted sales of $702.7 million in 2001. March sales were helped by the timing of the Easter holiday, which came two weeks earlier than last year, and so the April numbers will be lower, the retailer noted.
The Limited reported a comp-store sales increase of 6% for the nine weeks ended April 6 compared to the same period in 2001. Net sales were $1.4 billion for the nine weeks, an increase of 9% compared to adjusted sales of $1.3 billion last year. Net sales for the nine weeks ended April 7, including Lane Bryant, were $1.452 billion.
— Joel Groover