Dismal Top-Line Considering Favorable Weather Comparison – February Could Be Ugly
Click here for the full report and various ‘stack’ presentations.
Big picture, comp sales in January 2012 should have been stronger. Why?
In January 2011, retailers unanimously suggested comp sales were negatively impacted by inclement weather (see comments below). Retailers should have received a nice lift in January 2012 due to the relative lack of store closures, etc. A retailer would prefer a warm winter (this year) versus a material number of store closures (last year).
It was a different story in February 2011. Sales in February 2011 rebounded as winter weather ‘normalized’ versus the prior month.
So, if retailers were unable to report stronger top-line results in January 2012 with a favorable weather comparison, what happens in February 2012 when the sector laps a good weather month?
Today, no one mentioned last year’s inclement weather. Let’s review some of the disclosures from retailers reporting monthly sales:
BIG
“We believe the last three weeks of January were impacted negatively by weather conditions in many of our major regions and markets.”
Ex-BJ
“Severe snow storms affecting the Northeast and Mid-Atlantic regions had a negative impact on merchandise comparable club sales of approximately 2.5%.”
COST
“For the reporting month, winter weather conditions had a negative impact in many regions with the US and Canada. We estimate that adverse weather conditions negatively impacted our reported January comp sales results by approximately 1.0% to 1.5%.”
FRED
“Poor weather and the inability of our customers to get early tax refunds in January were critical factors contributing to the sales shortfall.”
JCP
“Geographically, the Company’s best performing regions were the Southwest and Northwest, compared to the Northeast and Southeast regions where winter storms affected sales and traffic trends throughout the month of January.”
KSS
“The Northeast region being most affected by snowstorms during the month.”
M
“While sales in January were restrained by the series of snowstorms that caused widespread store closings along the East Coast and in the Southeast U.S….”
TJX
“We achieved these increases despite some of the worst winter storms in many years in the Northeast and Midwest, where we have a heavy concentration of stores.”
A couple retailers suggested that delayed tax refunds negatively impacted sales in January 2012 (e.g. CATO, CTRN).
The problem is that, in January 2011, many more retailers complained about delayed tax refund anticipation loans versus the prior year (e.g. BIG, BONT, CTRN, and FRED). Therefore, it’s difficult to believe that delayed tax refunds negatively impacted sales (relative to LY) as much as CATO and CTRN are suggesting.
In January 2012, retailers generally reported comp sales results that were -100 Bps to -300 Bps below December 2011 (see attached table).
Therefore, keep an eye on retailers that reported comp sales in January 2012 that were greater than -300 Bps below December 2011 (CATO, DDS, JWN, M, ROST, SMRT, and WTSLA).
Five retailers that report monthly sales numbers have negative 2-year ‘stacks’ in January 2012. These are: GPS (-1.0%), BONT (-3.2%), SMRT (-5.1%), WTSLA (-6.8%), and CATO (-10.0%). See attached table.
4-year comp sales ‘stacks’ range from +30.0% at LTD to -25.2% at WTSLA. See attached table.
Furniture continues to be mentioned as a relatively strong category, continuing the trend that has been reported over the past few months. Clearly, the category has been the worst performer over the past 5 years and the resurgence may have more to do with “replenishment” than anything else. But, an encouraging trend nonetheless.
COST suggests that weaker foreign currencies negatively impacted total company comp sales by -75 Bps in January 2012. This compares to -50 Bps in December 2011, -50 Bps in November 2011, and -25 Bps in October 2011.
Keep an eye on retailers with FX exposure.
COST suggests that Food/Sundry inflation was +LSD to +MSD in January 2012 versus +MSD in December 2011, +LSD to +MSD in November 2011, and +LSD in October 2011. Interestingly, Food/Sundry inflation at COST in January 2011 was disclosed as “a little over” +100 Bps.
In addition, COST disclosed that its Fresh Foods inflation was +LSD to +MSD in January 2012 versus +MSD in December 2011. In January 2011, Fresh Foods category inflation was disclosed as +LSD. When will runaway food inflation end?
While the lowered EPS guidance revision for Q4 2011 at ANF did not surprise us, the company is likely being too optimistic re: FY 2012 ($3.50 to $3.75 guidance range). We’re well below $3.00 for next year.
ANN management AGAIN proves that it cannot forecast its GPM%. The company has ‘missed’ its quarterly GPM% guidance in 4 of the past 5 fiscal quarters.
Last month, JWN management suggested that The Rack’s relatively poor performance versus LY was a function of a GroupOn event in the prior year. What was this month’s excuse? We’re continuing to forecast an EPS ‘miss’ versus consensus expectations in Q4 2011.
Looking Ahead by Looking Back… What happened in February 2011?
Overall, comp sales in February 2011 were strong following a weather impacted January 2011.
While a few retailers attempted to suggest that weather negatively impacted sales in February, a a couple of retailers mentioned that weather trends became much more favorable in the latter half of the month.
In February 2011, the strongest category performance was in food (inflation), men’s apparel, jewelry, and shoes. Weak categories included electronics.
In February 2011, week #4 was generally considered to be the strongest fiscal week from a comp sales perspective. Week #1 was generally held to be the weakest fiscal week in February 2011.
In February 2011, the Northeast and Mid-Atlantic were generally held to be the strongest comp sales regions. The Midwest was generally held to be the weakest comp sales region in February 2011.
Dismal Top-Line Considering Favorable Weather Comparison – February Could Be Ugly Click here for the full report and various ‘stack’ [...]
Weekly Top 5 – Five Articles Worth Reading
Posted By: Retail Geeks
Each week, we provide a PDF of 5 articles of interest to investors focus on the retail/consumer space. Enjoy.
Starbucks Enters India With Tata’s Help Click to Open PDF
Following the government’s decision to reverse its ruling allowing 51% foreign ownership of supermarkets and department stores, many foreign companies and investors soured on India. But, now the government in India is allowing 100% foreign investment in “single-brand retail.” This will likely open the door to more of these types of announcements from SBUX.
Here’s a couple of funny tidbits. Coca-Cola Co. was banned in India until the mid-1990s for refusing to divulge its secret recipe. Also, there was a protest 15 years ago as Indian farmers and politicians protested what they viewed as a threat to India’s rich culinary culture. Clearly, Americans could care less about that sort of threat by KFC.
Posted: Monday, January 30, 2012
Source: WSJ
Apple Hires Dixons Chief to Run Retail Stores Click to Open PDF
A missed opportunity for BBY to replace current CEO Brian Dunn.
Posted: Tuesday, January 31, 2012
Source: WSJ
Store Brands Step Up Their Game, and Prices Click to Open PDF
Consumers are developing loyalty to store brands for reasons besides price. In some cases, consumer even pay more for store brands. This represents a real change versus 5-10 years ago.
Posted: Tuesday, January 31, 2012
Source: WSJ
Questions Surrounding Avon Increase Click to Open PDF
Apparently, a CFO’s loose lips at a management access dinner got him fired for a possible Regulation FD violation.
Posted: Wednesday, February 01, 2012
Source: WWD
Retailers Posted Solid January Sales Click to Open PDF
Interestingly, the monthly WWD article headline said the exact opposite (“January Sales Miss Mark”). In our view, against an easy weather comparison, sales in January 2012 were weak.
Posted: Friday, February 03, 2012
Source: WSJ
Sales Release Thursday – January 2012
Posted By: Retail Geeks
Dismal Top-Line Considering Favorable Weather Comparison – February Could Be Ugly
Click here for the full report and various ‘stack’ presentations.
Big picture, comp sales in January 2012 should have been stronger. Why?
In January 2011, retailers unanimously suggested comp sales were negatively impacted by inclement weather (see comments below). Retailers should have received a nice lift in January 2012 due to the relative lack of store closures, etc. A retailer would prefer a warm winter (this year) versus a material number of store closures (last year).
It was a different story in February 2011. Sales in February 2011 rebounded as winter weather ‘normalized’ versus the prior month.
So, if retailers were unable to report stronger top-line results in January 2012 with a favorable weather comparison, what happens in February 2012 when the sector laps a good weather month?
Today, no one mentioned last year’s inclement weather. Let’s review some of the disclosures from retailers reporting monthly sales:
BIG
“We believe the last three weeks of January were impacted negatively by weather conditions in many of our major regions and markets.”
Ex-BJ
“Severe snow storms affecting the Northeast and Mid-Atlantic regions had a negative impact on merchandise comparable club sales of approximately 2.5%.”
COST
“For the reporting month, winter weather conditions had a negative impact in many regions with the US and Canada. We estimate that adverse weather conditions negatively impacted our reported January comp sales results by approximately 1.0% to 1.5%.”
FRED
“Poor weather and the inability of our customers to get early tax refunds in January were critical factors contributing to the sales shortfall.”
JCP
“Geographically, the Company’s best performing regions were the Southwest and Northwest, compared to the Northeast and Southeast regions where winter storms affected sales and traffic trends throughout the month of January.”
KSS
“The Northeast region being most affected by snowstorms during the month.”
M
“While sales in January were restrained by the series of snowstorms that caused widespread store closings along the East Coast and in the Southeast U.S….”
TJX
“We achieved these increases despite some of the worst winter storms in many years in the Northeast and Midwest, where we have a heavy concentration of stores.”
A couple retailers suggested that delayed tax refunds negatively impacted sales in January 2012 (e.g. CATO, CTRN).
The problem is that, in January 2011, many more retailers complained about delayed tax refund anticipation loans versus the prior year (e.g. BIG, BONT, CTRN, and FRED). Therefore, it’s difficult to believe that delayed tax refunds negatively impacted sales (relative to LY) as much as CATO and CTRN are suggesting.
In January 2012, retailers generally reported comp sales results that were -100 Bps to -300 Bps below December 2011 (see attached table).
Therefore, keep an eye on retailers that reported comp sales in January 2012 that were greater than -300 Bps below December 2011 (CATO, DDS, JWN, M, ROST, SMRT, and WTSLA).
Five retailers that report monthly sales numbers have negative 2-year ‘stacks’ in January 2012. These are: GPS (-1.0%), BONT (-3.2%), SMRT (-5.1%), WTSLA (-6.8%), and CATO (-10.0%). See attached table.
4-year comp sales ‘stacks’ range from +30.0% at LTD to -25.2% at WTSLA. See attached table.
Furniture continues to be mentioned as a relatively strong category, continuing the trend that has been reported over the past few months. Clearly, the category has been the worst performer over the past 5 years and the resurgence may have more to do with “replenishment” than anything else. But, an encouraging trend nonetheless.
COST suggests that weaker foreign currencies negatively impacted total company comp sales by -75 Bps in January 2012. This compares to -50 Bps in December 2011, -50 Bps in November 2011, and -25 Bps in October 2011.
Keep an eye on retailers with FX exposure.
COST suggests that Food/Sundry inflation was +LSD to +MSD in January 2012 versus +MSD in December 2011, +LSD to +MSD in November 2011, and +LSD in October 2011. Interestingly, Food/Sundry inflation at COST in January 2011 was disclosed as “a little over” +100 Bps.
In addition, COST disclosed that its Fresh Foods inflation was +LSD to +MSD in January 2012 versus +MSD in December 2011. In January 2011, Fresh Foods category inflation was disclosed as +LSD. When will runaway food inflation end?
While the lowered EPS guidance revision for Q4 2011 at ANF did not surprise us, the company is likely being too optimistic re: FY 2012 ($3.50 to $3.75 guidance range). We’re well below $3.00 for next year.
ANN management AGAIN proves that it cannot forecast its GPM%. The company has ‘missed’ its quarterly GPM% guidance in 4 of the past 5 fiscal quarters.
Last month, JWN management suggested that The Rack’s relatively poor performance versus LY was a function of a GroupOn event in the prior year. What was this month’s excuse? We’re continuing to forecast an EPS ‘miss’ versus consensus expectations in Q4 2011.
Looking Ahead by Looking Back… What happened in February 2011?
Overall, comp sales in February 2011 were strong following a weather impacted January 2011.
While a few retailers attempted to suggest that weather negatively impacted sales in February, a a couple of retailers mentioned that weather trends became much more favorable in the latter half of the month.
In February 2011, the strongest category performance was in food (inflation), men’s apparel, jewelry, and shoes. Weak categories included electronics.
In February 2011, week #4 was generally considered to be the strongest fiscal week from a comp sales perspective. Week #1 was generally held to be the weakest fiscal week in February 2011.
In February 2011, the Northeast and Mid-Atlantic were generally held to be the strongest comp sales regions. The Midwest was generally held to be the weakest comp sales region in February 2011.
Dismal Top-Line Considering Favorable Weather Comparison – February Could Be Ugly Click here for the full report and various ‘stack’ [...]
Facebook Fan Stats – January 2012
Posted By: Retail Geeks
WAG Delivers Impresses Fan Growth – KSS, TLB, URBN, ex-JCG Ignore Social Media
Social media is fast becoming the most effective approach to boost brand awareness, understand the customer, get feedback, as well as direct traffic to a company’s web site and/or stores.
We like to track the Facebook activities and monthly fan base growth for the retailers and brands that we follow (and many others). Click here to see our compilation of monthly Facebook ‘fan’ numbers for January 2012 (‘fan’ stats as of 01.31.2012).
It is worth noting that out of the 188 retail chains/brands covered in this survey, the following were the largest percentage gainers of ‘fans’ in January 2012 versus the prior month:
Dress Barn (ASNA)
Sunkist Soda (DPS)
Walgreen’s (WAG)
7Up (DPS)
Burger King (ex-BKC)
86.9%
82.2%
27.4%
27.3%
26.8%
Naturally, most of the above have a small base. Therefore, let’s look at the largest percentage gainers of ‘fans’ in January 2012 versus the prior month for brands with greater than 1.0 million ‘fans.’
Walgreen’s (WAG)
Burger King (ex-BKC)
Fanta (KO)
Ann Taylor Loft (ANN)
eBay (EBAY)
27.4%
26.8%
26.6%
22.8%
19.3%
Conversely, It is worth noting that out of the 188 retail chains/brands covered in this survey, the following were the lowest percentage gainers of ‘fans’ in January 2012 versus the prior month:
Kohl’s (KSS)
Talbots (TLB)
Pei Wei Asian Diner (PFCB)
Casual Male (CMRG)
Coldwater Creek (CWTR)
0.5%
0.5%
0.6%
0.7%
0.8%
Finally, it’s worth noting that out of the 188 retail chains/brands covered in this survey, the following were the lowest percentage gainers of ‘fans’ in January 2012 versus the prior year (i.e. versus January 2011):
Urban Outfitters Europe (URBN)
Capital Grille (DRI)
Ed Hardy (ICON)
Janie & Jack (ex-GYMB)
J. Crew (ex-JCG)
22.3%
28.7%
36.8%
37.6%
38.9%
Additional Notes:
Coca Cola (KO) had the largest number of ‘fans’ at the end of January 2012 with 38.1 million followed by Starbucks (SBUX) at 27.7 million.
Wal-Mart (WMT) seems to have really embraced social media over the past 12-18 months, although its growth rate slowed in January 2012. Costco (COST)… not so much.
The number of ‘fans’ at Kohl’s (KSS) dwarfs that of their department store peers. Inerestingly, the chain has 6.3 million fans versus 4.1 million at Macy’s (M).
Why would Pacific Sunwear (PSUN) have a larger ‘fan’ following than Urban Outfitters (URBN)?
Why would Cost Plus (CPWM) have a larger ‘fan’ following than Bed Bath & Beyond (BBBY) and Pier 1 (PIR)? Mind boggling. That said, both BBBY and PIR delivered impressive ‘fan’ growth in January 2012 (i.e. they’re catching-up).
What happened to Williams-Sonoma (WSM)? The company’s 3 ‘core’ brands are bringing up the rear in the Home Furnishings sector.
WAG Delivers Impresses Fan Growth – KSS, TLB, URBN, ex-JCG Ignore Social Media Social media is fast becoming the most [...]
Weekly Spin Cycle: January 30, 2012
Posted By: Retail Geeks
Welcome to the Weekly Spin Cycle. Each week, we’ll deliver some news and commentary about the retail industry. Whether you’re [...]
Weekly Top 5 – Five Articles Worth Reading
Posted By: Retail Geeks
Each week, we provide a PDF of 5 articles of interest to investors focus on the retail/consumer space. Enjoy. How [...]
GPM% Upside vs. Expectations Continues at AAPL Driven by Favorable Sales Mix
Posted By: Retail Geeks
While we don’t cover AAPL as closely as many of the retailers that we follow, we have put together a [...]
Weekly Spin Cycle: January 23, 2012
Posted By: Retail Geeks
Welcome to the Weekly Spin Cycle. Each week, we’ll deliver some news and commentary about the retail industry. Whether you’re [...]
Weekly Top 5 – Five Articles Worth Reading
Posted By: Retail Geeks
Mickey Drexler Blasts Malls Click to Open PDF Mr. Drexler suggests that the holiday 2011 season was “one of the [...]
Weekly Spin Cycle: January 16, 2012
Posted By: Retail Geeks
Welcome to the Weekly Spin Cycle. Each week, we’ll deliver some news and commentary about the retail industry. Whether you’re [...]
Commerce Dept Sales Data: December 2011
Posted By: Retail Geeks
Reminder: We like to look at the Commerce Department data on a comp basis (year-over-year change). Hey, it’s government data, [...]