blog posted on cnbc.com March 1, 2012
Another comp day has come and gone. But unlike most monthly sales days we saw beats across the Board. Well, with the exception of Kohl’s (KSS). There is always one in the crowd.
And here is to the weather…
Biggest news of the day. Who doesn’t love an underdog sales story? Gap (GPS) proved all those nay-sayers wrong with a positive comp. Not just a plus sign but a +4%. Yes, that color in the stores and better fabrics is driving business. And I am sure weather did not hurt. And a little cat and mouse not revealing how well things were going on last week’s Q4 conference call. While I have been touting new product response during my store tours GPS faked me out on the magnitude of this one.
And now onto other good news, although not as shocking to the system.
Nordstrom (JWN) and Ross Stores (ROST) both put estimates to shame and came in almost 2x the Street. The high-end still has plenty of steam while the off price players are capturing share from the middle players (some lost in transition -JCP-and some just lost-Kohl’s-KSS) with the exception of Macy’s (M)
And now addressing that middle ground. Macy’s beat with a 4.6% vs a 3.5% estimate from the Street. This comes after a disappointing January. However, even a light Jan did not keep company from raising numbers. Let’s face it Macy’s is the outlier of the mid tier players. Training, localisation of product and a focus on the omni channel approach has paid off with consistent comps. On the other end of the spectrum there is Kohl’s. The company put up a -0.8% vs estimates of flat. But to be fair the company did tell us the February comp would be worse than Q1 guidance of 1%. Analysts may not have taken the cue far enough. Going forward this is a back half weighted comp story with renewed pricing efforts. I am not worried for Macy’s quite yet.
Wal-Mart vs Target. Target put up a 7% comp for February with food, apparel & accessories (above company average, cheers to the weather), household essentials, home and hardlines all increasing. Target no doubt had a little help from the weather but that is not the whole story. Exclusive product (Jason Wu intro in Feb) as well as momentum in store remodels are internal drivers.
Wal-Mart-if you can’t give us comps give us dividend growth. Wal-Mart reported US comps of 1.5% for Q4 (we do not know Feb comp)which was disappointing and raises the question is price investment having the desired effect? While traffic turned positive last quarter results were simply not enough. Today WMT suggested the US business is “back on track” and raised its dividend by 9% (raises every year). While returning cash to shareholders is always a welcome move, consistent comps are the key, especially with the back-drop of strength reported today.