A Look At Feb Same Store Sales; Enjoy the Transparency While Lasts
(blog posted on cnbc.com Feb 28, 2012)
As companies reporting monthly sales are quickly going the way of the dinosaur, enjoy the transparency while it lasts.
Last week we heard from the first round of major retailers reporting Q4 earnings. Some were even cooperative enough to give us an early read on February comps. And why not? Good results or bad It won’t be long before companies have to rip off the monthly same store sales band-aid on Thursday 3/1.
Target (TGT) gave us the nod Feb running well ahead at 4%+, Limited (LTD, )noted trends of mid to high single digits versus guidance of low singles. And in the camp of low-balling the numbers TJX (TJX)called out 7% trends in Feb (although guidance for Q1 is 2-4%) and Feb comparisons are the easiest of the quarter.
In the case of Kohl’s (KSS)not all early looks were good ones. The company issued Q1 and annual guidance well below the Street. And there is nothing like trying to backload comps for the year as renewed focus on price leadership efforts are expected to pay off. Annual comps expected to increase +2% while Q1 guidance +1% (Feb & April below quarter with March above). I have seen the “back half recovery” story before and I can tell you that it usually does not end well.
While most of the thunder has already been taken out of the February same-store sales report coming to you this Thursday, there are exceptions.
A me-too story. We have not heard from ROST as the company does not report Q4 until 3/15 and still reports monthly comps. If TJX is any indication the momentum in the off price space continues, and will only accelerate as we as we see gas prices crawling toward $5 this summer. In addition a warm winter resulted in the trickle down of must have product to the channel as well as new vendor relationships.
A When will this turnaround happen story? The Gap rally ytd of 20%+ reflects high expectations for Spring product (not to mention a store closure program and a shake-up in management ranks). The hope is the “Be Bright” campaign, which launched Feb 10th in North America, may mark an inflection point in a business that has been struggling for years.
After all, now when you look at a Gap marketing campaign, it no longer reads like a black and white photo. Think skinny jeans in pastel colors (yes for men too). This Thursday we will find out if the new Gap creative center, launched less than one year ago, is finally starting to turn this massive ship around.
It is unlikely February sales turned so early in the process (if they did we would venture the company would have called it out during Q4 earnings) as the new Spring line has been in stores just a few weeks. However, comments regarding how product is being received will be key for the stock.
A We have it together when out competitors continue to fall apart story. On the other end of the performance spectrum we have Macys (M), a turnaround that has actually worked.
The company issued annual comp guidance for 2012 of 3.5% on top of 2011 comp performance of 5.3% but neglected to give us an early look at Feb sales. While the company disappointed slightly in January the stock continues to grind ahead as selling tactics, product localization and the omni-channel approach continue to drive upward revisions to earnings. Over the past year Macy’s guidance has proved conservative. For example, comps guidance for 2011 started at 3% versus 5.3% actual. Investors are looking for a repeat performance. And that is not to mention the share up for grabs at JCP (change disruption) and KSS (continued guide downs) SHLD (do I need to rehash another mess of a comp?)