Thursday, March 3, 2011

February Retail Sales Rally Despite Cold Weather

February sales were strong despite rising gas prices and dropping temperatures, according to economists at Master Card Advisors’ SpendingPulse and the International Council of Shopping Centers.
The ICSC reported American chain-store sales climbed 4.2 percent in February compared with the same period last year. The result beat the ICSC’s forecast of a 2.5 percent to 3 percent gain. “The breadth and the strength of sales gains in February was encouraging as more retailers and retail segments participated in the improvement,” said Michael P. Niemira, the ICSC’s chief economist.

Michael McNamara, vice president of SpendingPulse, said February followed a trend of rising sales that began in fall 2010. “February held on to the momentum from the last few months. Ongoing strong performance by the financial markets and growing consumer confidence may have contributed to ongoing retail growth. … This is even in the face of the disruptive weather that put a damper on spending in several sectors,” he said.

According to SpendingPulse, February’s top performer was e-commerce. The category posted its fourth consecutive month of double-digit growth with a 13.2 percent increase in February compared with the same period last year. Apparel sales also did well, growing 6 percent.

For teen retailers, results were better than expected. Hot Topic Inc.’s February same-store sales declined only 1.4 percent, defying analysts’ predictions of a 5 percent drop. The City of Industry, Calif.–based retailer’s net sales declined 1.5 percent to $53.4 million in February.

Same-store sales for Zumiez Inc. shot up 12.8 percent in February. The Everett, Wash.–based retailer’s net sales jumped 18.3 percent to $32.7 million for the month.

Department-store giant Macy’s Inc. showed same-store-sales gains of 5.8 percent in February. Off-pricer Ross Stores Inc. reported a same-store-sales increase of 3 percent.

February’s retail sales almost stalled because of cold weather but then warmed up, according to Liz Pierce, an analyst for Newport Beach, Calif.–based financial-services firm Roth Capital Partners. The cold depressed both demand and sales for new spring merchandise. However, temperatures increased just as retailers promoted sales for the Valentine’s Day and the President’s Day weekends. However, Pierce believes the cold and fuel prices took a bite out of some of the month’s potential.

SpendingPulse’s McNamara also recommended retailers keep an eye on gas prices. “If gasoline prices continue to rise, this would mean less disposable income for other retail sectors,” he said. But increased prices at the fuel pump would ultimately benefit online retail.

Source : Apparel News Group

Canadian retailers go global

Amid growing competition from foreign retailers in their home market, more Canadian stores are testing the waters beyond their own borders.

Loblaw Cos. Ltd. confirmed Wednesday that its Joe Fresh apparel brand would open its first four U.S. stores later this year, including a site on New York City’s high profile Fifth Ave.

Iconic Canadian coffee and doughnut chain Tim Hortons Inc., meanwhile, provided further details on its plans to open its first stores outside North America — starting in the Middle East.

At the same time, Quebec-based convenience store operator Alimentation Couche Tarde Inc. mused about the opportunity to buy gas stations in Europe, a formula that has worked well for it in the U.S. No specific plans were announced, an industry analyst said.

The moves come as more retailers in mature markets, including Canada, the U.S. and Europe, look beyond their borders for future growth, industry experts said.

Canada is experiencing a wave of foreign retailers, including U.S. based Target Corp., which threatens to shake up the status quo.

“I think it’s that Canada has a finite size and if you have a company that’s growing and doing well, eventually you have to decide whether you’re going to leap over the border,” said Perry Caicco, an analyst with CIBC World Markets and host of Wednesday’s Retail and Consumer Conference at which Loblaw and Couche Tarde made their remarks.

“The broader trend toward globalization is growing in leaps and bounds. Many markets have reached their saturation point so they’re looking at greener fields,” said Wendy Evans, a principal in the Toronto-based retail consulting firm Evans & Company Consultants Inc.

And while North American and European retailers initially test familiar waters in neighbouring countries, their ultimate goal is the young, emerging, high growth markets in Asia and South America, Evans said.

Loblaw said it plans to proceed cautiously in the U.S., a market where some Canadian retailers have underestimated the fierce level of competition.

“It will be very much a pilot project,” Loblaw president and deputy chairman Allan Leighton said.

Joe Fresh founder Joseph Mimran said later the brand is already well-known in the U.S.

“They keep asking for us to open stores south of the border,” said Mimran of Joseph Mimran & Associates, Creative Director Apparel, Home and Entertainment for Loblaw Cos Ltd.

The New York store will be located at 510 Fifth Ave. in an historic glass box on the corner of 43rd Street, near the New York Public Library and Bryant Park, Mimran said in a statement.

Tim Hortons said it’s also taking a prudent approach, partnering in the Middle East with Dubai-based Apparel Group, an experienced local operator with deep financial pockets and extensive real estate expertise.

The target region, which includes the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman, is seen as a “gateway” to other emerging markets, said Tim Hortons president and chief executive officer Don Schroeder.

“Everyone talks about going to China and India. The playing field is littered with companies that jumped in,” Schroeder told the Star in an interview. The company has plans for 120 stores in the Middle East, starting with 5 this year.

Other Canadian retailers, include shoe and handbag specialist Aldo and lingerie chain La Senza, have successfully used the affluent Middle East as a springboard to other regions, Evans noted.

Both Tim Hortons and Joe Fresh plan to open more stores in existing markets, they said.

Tim Hortons reported Wednesday that fourth quarter net income grew to $377.1 million, mainly on the sale of its 50 per cent stake in Maidstone Bakeries.

Revenue declined 3.5 per cent to $643.5 million as the quarter contained one less week.

Sales at stores open more than a year rose 6.3 per cent in the U.S. and 3.9 per cent in Canada, where most of its 3,500 outlets are located, the company said.

The company announced it would boost its quarterly divided by 31 per cent to 17 cents per common share and a $445 million buyback of its shares.

Source : Toronto Star