Amid speculation the economic downturn is over, major retailers including Target, J.C. Penney and Ross Thursday announced stronger-than-expected February sales.

Some chains — including Abercrombie and Gap — posted more disappointing results. But their announcements coincided with optimistic words from Federal Reserve Chairman Alan Greenspan, who met with lawmakers Thursday morning in Washington.

"The recent evidence increasingly suggests that an economic expansion is already well under way," Greenspan told the Senate Banking Committee. That view was supported by the Bank of Tokyo-Mitsubishi's monthly index, which reported today that comparable-store sales at retail chains were stronger in February 2002 than in any previous month since April 2000.

Based on the bank's tally of 79 chain stores, comparable store sales in February rose by 6.2% compared to the prior year.

Although Greenspan’s comments came partly in response to a surprisingly strong performance by the manufacturing sector, analysts note that consumer spending has also continued to outpace predictions, driving up retail numbers throughout the recession.

"Today’s retail numbers paint more of the same picture, which is that consumer spending is still strong out there, and that consumers continue to spend more of their dollars with the discount retailers," said Dr. Roger Tutterow, director of the Econometric Center at suburban Atlanta’s Kennesaw State University.

"That’s something we saw throughout most of 2001," Tutterow said. "In times of uncertainty — when there are concerns over job security or the general economic climate — people will tend to gravitate toward getting better deals. So the Wal-Marts and the Targets have really been the big winners in terms of consumer spending over the past couple of quarters."

Indeed, Wal-mart posted record February net sales today of $17.2 billion, an increase of 15.6% over the prior year. And Target saw a net sales increase of 16.7% compared to February 2001.

Greenspan’s comments come as welcome news, Tutterow said. "But I also think he’s right that we’re not going to jump right back into the 4% growth rate that we saw from ’97 through ’99."

For that to happen, businesses will need to have enough confidence in the economy to make major capital investments. "But again, the consumer is hanging in there pretty well," Tutterow said. "And if we see a rebound in terms of employment or equity prices, you’ll see consumer spending pick up even more steam in the spring."

Looking forward to March, Michael Niemira of the Bank of Tokyo-Mitsubishi's Economic Research Department foresees comparable-store sales growth of 6% to 7% compared to March 2001, in part because Easter traditionally provides a lift in sales.

Below is a summary of February sales numbers posted by several major tenants:

Target's on target

Minneapolis-based Target Corp. was among the winners in February with a net sales increase of 16.7%, or $2.7 billion, compared to $2.3 billion in 2001. The chain’s comparable store sales increased 8.5% from last year.

Citing Target’s "exceptional strength," Chairman and CEO Bob Ulrich said the momentum the company enjoyed in the fourth quarter "clearly continued into February."

In a report released this morning, Goldman Sachs raised its previous quarterly and fiscal year estimates for Target shares. The firm continues to recommend the stock and says it has the potential for 15% to 20% appreciation in the next year.

Goldman Sachs noted that Target’s 8.5% rise in comparable store sales growth was well above the company's previous estimate of 1.3%. Goldman Sachs said market share losses at Kmart should help Target significantly in 2002. The firm said it sees signs the retail lull is ending.

In early trading this morning on the New York Stock Exchange, Target shares were up 23 cents, or 54%, compared to a previous close of $42.45.

J.C. Penney posts 12.5% sales increase

More good news came from J. C. Penney Co., which today reported that its comparable store sales increased12.5% in February 2002 compared to the same period last year. Calling those numbers "significantly above plan," J.C. Penney cited strong apparel sales and said consumers responded well to its merchandise assortments, which it is supporting with "aggressive" marketing and promotional programs.

The retailer’s best-performing merchandise categories for the month were children's, men's, and women's apparel. Comparable drugstore sales increased 6.7%, with pharmacy sales increasing 9.7% and front-end sales increasing 1.5%. (J.C. Penney is the parent company of Eckerd drugs.)

However, J.C. Penney said its catalog sales decreased 28.7% during February, possibly as a result of its decision to cut back on promotional events and media buys.

Ross opens more stores, sees sales grow

Another apparent winner was Newark, Calif.-based Ross Stores Inc., which today reported February 2002 sales of $227 million, a 25% increase above sales of $181 million in February 2001.

The chain’s comparable store sales for the four week period rose a strong 13%. "We are very pleased with the strength of our business in February, which was driven primarily by sales of full-margin spring product," CEO and Vice Chairman Michael Balmuth said in a statement. "Both geographic and merchandise trends were broad-based, with solid gains in same-store sales in almost every market and merchandise department."

Balmuth said he believes the company benefited from its efforts to strengthen its merchandise offerings. Ross now operates 463 stores compared to 409 locations at the end of February last year.

Abercrombie reports 13% increase in net sales

Although Abercrombie & Fitch reported a 13% increase in net sales -- which rose to $89 million in February 2002 compared to $78.6 million for the same period last year — the New Albany, Ohio-based chain saw its comparable store sales fall by 9% in February.

Seth Johnson, the company’s COO, said in a conference call that inventory problems were to blame. "As we expected, low inventory levels in both winter carry-over and spring merchandise negatively impacted February comps," Johnson said. With inventories down 30% per square foot at the beginning of the month, Abercrombie found it difficult to match last year’s strong sales contribution from winter carry-over merchandise, Johnson said.

On a square foot basis, the retailer ended February with winter carry-over inventory approximately 50% below February of last year. The company is encouraged by initial selling of its spring assortment but still expects sales to be flat or up only slightly entering the second quarter.

"The environment continues to be difficult and we remain cautious at this point on our comp expectations," Johnson said.

Gap’s comparable store sales fall 17% in February

The bad news continued for Gap Inc., which today reported that its comparable store sales for February dropped 17% compared to a decrease of 11% the prior year.

The retailer posted net sales of $720 million for the four-week period, down 8% from $784 million in 2001. "Overall, February sales did not meet our expectations due to weak results at Gap and International, which were partially offset by better than anticipated results at Old Navy," CFO Heidi Kunz said in a statement. "Merchandise margins came in slightly ahead of expectations but remain below last year's levels."