US retailers show signs of life- More than a dozen retailers raise earnings guidance

US retailers show signs of life- More than a dozen retailers raise earnings guidance
By Jonathan Birchall and Simone Baribeau in New York
Copyright The Financial Times Limited 2009
Published: May 7 2009 15:38 | Last updated: May 7 2009 16:44
http://www.ft.com/cms/s/0/96a9b01e-3b12-11de-ba91-00144feabdc0.html


More than a dozen US retailers raised their earnings guidance on Thursday, after releasing April sales data that showed battered US shoppers displaying renewed interest in purchases of clothing and other discretionary items, while continuing to seek out low cost stores.

Companies raising guidance included three three largest US department store chains - JC Penney, Kohl’s and Macy’s - as well as Target, the mass discounter.

Retail Metrics, which tracks the monthly sales numbers, said its overall index for the month showed a 1.5 per cent increase, supported in part by the shift of the boost from Easter sales, which fell in March last year.

Ken Perkins, of Retail Metrics said the figures were better than expected and had also been “aided by rising consumer confidence from improving market performance” as well as extra cash from lower tax payments and mortgage refinancing.

JC Penney, whose comparable sales fell 6.1 per cent, said its strongest performing divisions had been women’s and children’s clothing - both that have been hard hit as shoppers cut back spending. Kohl’s, with comparable sales down 6.2 per cent also reported strong children’s clothing sales, as it raised its earnings guidance by more than 10 cents a share.

Target, Wal-Mart’s leading rival, said its same-store sales increased by 0.3 per cent, saying it had been able to avoid price cutting and had seen better than expected profit margins. The retailer said it expected its first quarter earnings to be “well above” the current $0.52 per share currently forecast by Wall Street.

Wal-Mart, the largest US retailer, continued to benefit from budget-focused shoppers, reporting a stronger-than-expected 5 per cent increase in comparable store sales.

Eduardo Castro-Wright, head of the retailer’s US stores, said the retailer “gained new customers [and] improved our market share position.” He said last week that the company had also seen renewed strength in discretionary spending.

Other low price retailer also continued to fare well. Dollar Tree, the hard-discount seller of cheap knick-knacks and basic goods, reported a 9.2 per cent increase in same store sales, while discount retailers Ross and TJX rose 6 per cent and 3 per cent respectively.

Apparel retailers, on the whole, fared better than expected. Sales at Aeropostale, The Children’s Place and Hot Topic rose. Abercrombie saw its sales down 22 per cent, while Gap reported a fall of just 4 per cent, with its Old Navy unit reporting a rare increase in comparable sales of 1 per cent.

Luxury department stores Saks and Neiman Marcus continued to struggle. Saks same store sales fell around 25 per cent, excluding the shift of a seasonal promotional event to May. Neiman said comparable sales were down 22.5 per cent for the month, with quarterly sales down 25 per cent.