Wal-Mart - February’s Retail Winner

This morning, retailers reported same-store sales for the month of February. Sales were decent compared to low expectations, but overall retail sales trends remain weak.

The big winner was Wal-Mart, Inc. (WMT) sales were up 8.1% year-on-year and comp-store sales increased 5.0%. It remains a price leader, and its stores continue to attract more shoppers looking for value. The company also noted that lower gasoline prices helped boost its results, as consumers had more discretionary income to spend inside the stores.

A couple of specialty retailers that stood out include Hot Topic (HOTT) up 10.8% and Buckle (BKE) up 21.0%. Both of those stores have nice individual stories that do not translate to other areas of retail. Among those retailers with weak reports were JC Penney (JCP) down 8.8% and Abercrombie (ANF) down 30%.

Overall, my sample of 20 retailers that report monthly sales had a comp-store sales decrease of 0.2% (thanks to Wal-Mart). Excluding Wal-Mart, the sample had a comp-store sales decline of 2.9%. So, there was not much positive news away from Wal-Mart and other discount retailers.

The consumer continues to make purchases based on need and price. For those stores that sell merchandise with moderate-to-high price points, that points to further weakness. However, the trend fits nicely with Wal-Mart’s strategy to sell the stuff people need at the best prices they can find. Look for the trends to remain intact for the next several quarters.

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