By William Spain
CHICAGO (Dow Jones) -- Most U.S. retailers, including Gap Inc.,
Target Corp. and Macy's Inc., reported weak January same-store
sales Thursday as soaring unemployment and the deepest recession in
three decades led consumers to retrench even as Wal-Mart Stores
Inc. bounced back with a gain for the month.
The number of new claims for state unemployment benefits surged
to their highest level since 1982, according to official data
released Thursday, a further sign that the U.S. labor market is
deteriorating at a rapid rate. Initial jobless claims rose 35,000
to a seasonally adjusted 626,000 in the week ended Jan. 31, the
Labor Department reported. This put the number at the highest level
in 26 years.
Meanwhile, the four-week average of new claims rose by 39,000 to
582,250. The four-week average draws the attention of economists
and investors because it smoothes out distortions caused by bad
weather, strikes or the timing of holidays. It is now at the
highest level since Dec. 4, 1982.
Wal-Mart (WMT) said January same-store sales -- those at outlets
open at least a year -- rose 1.5%, or 2.1% excluding fuel, while
total sales were up 1.8% to $27.7 billion.
That was ahead of the average estimate of analysts polled by
Thomson Reuters calling for 1.1% same-store sales growth.
Bentonville, Ark.-based Wal-Mart also said it will now provide
performance targets four times a year, rather than each month.
"We believe this guidance is a more appropriate measure for our
investors, particularly in volatile times when consumer swings are
more difficult to predict," Wal-Mart said in its sales report.
"This is more consistent with the long-term view we take on our
business."
Looking ahead, Wal-Mart expects U.S. same-store sales without
fuel during the period from January 31 through May 1 to increase by
between 1% and 3%.
Discount rival Target (TGT) posted a 3.3% drop in January
same-store sales, not as dire as the 5.5% decrease that had been
projected, while total sales for the period ticked up 0.8% to $4.14
billion. The company added that it expects to report fourth-quarter
earnings that are "somewhat lower" than analysts' consensus
estimate of 86 cents a share, citing pressure from holiday
markdowns and the impact of recent job cuts.
Things were not so good at the more upscale Macy's (M), the
department-store operator whose January same-store sales fell 4.5%.
Still, the consensus view had been for a monthly decrease of
6.3%.
Total sales for the four weeks ended Jan. 31 fell 4.7% to $1.213
billion.
That means that total sales for the company's full fiscal year
were $24.9 billion, down 5.4%, while same-store sales slipped 4.6%.
Macy's recently announced a raft of layoffs to deal with the
downturn while also promising to focus on a "localization" program
to drive sales.
"Given the poor macro-economic environment, [the company]
continues to manage its business conservatively to ensure
inventory, expenses and capital expenditures are aligned with sales
assumptions for 2009," Macy's said in a statement.
"The company ended the year with approximately 7.4% lower
inventory on a comparable-store basis and believes its assortments
are well-positioned to deliver value and newness going into the
spring season," the company said.
Even worse further down the retail food chain
Meanwhile, Gap Inc. (GPS) reported a whopping 23% drop in
January same-store sales -- worse than the expected 15.4% drop. Net
sales generated by the apparel retailer fell 19% on the month to
$757 million.
Still, Gap said that it now expects earnings for fiscal 2008 to
come in at $1.32 to $1.33 a share, as opposed to management's prior
view of $1.27 to $1.30 a share, largely on the back of cost
cuts.
At Dillard's (DDS), same-store sales fell 12%, double the pace
analysts had expected, while total sales decreased 13% to $376
million. Ladies' apparel and accessories, along with juniors' and
children's apparel, ranked among the weakest categories.
For J.C. Penney (JCP), same-store sales fell 16.4% -- nearly
five percentage points worse than the analyst consensus -- while
January's total sales slumped 15.5% to $983 million. The
department-store operator said it now expects earnings for the
fourth quarter to be in a range of 90 cents to 93 cents per a
share, at the low end of its previous forecast of 90 cents to $1.05
a share
And teen-wear retailer Abercrombie & Fitch (ANF) also took
it in the neck, albeit not as badly as had been expected.
Same-store sales fell 20% last month, better than the 26.8%
expected decline, while total sales fell 13% to $191.5 million.