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Retail sales in February were generally positive, with a few positive contributions from brands like TJX (NYSE: TJX ) and Costco (NASDAQ: COST ) . While the number of big reporting companies has dropped off in 2013, the sales releases still give a broad idea of how consumers are reacting to changes in the economy. Wall Street analysts are expecting overall sales to have risen 3.3% once all the reports are in. That's a far cry from February 2012, when the average report showed a 6.4% increase in sales.
But the confusion is all part of the general feeling sweeping over consumers. While the latest poll shows that consumer confidence increased in the beginning of February, that confidence didn't seem to be reflected in purchasing decisions. Here are few of this month's highlights, and a look at what the decline means for retailers in general.
February wasn't all bad news. Gap (NYSE: GPS ) posted a modest increase of 3%. That's a drop from this time last year, but it's only a 1-point drop. The company continued to see its strongest increases in the Old Navy brand, which it's been working hard on over the past few months. Investors should keep an eye out for Old Navy in Japan, which Gap is going to be pushing later this year due to the success of the company's Tokyo store.
The aforementioned TJX saw a small rise as well, with comparable sales up 1% in February. That's a borderline success, but better than the company expected. As seems to always be the case, management said that sales at the end of the month were on the rise, so be on the lookout for better sales in March. The company is coming off a strong year of 7% comp sales increases, so investors are hoping that things get better as this quarter moves on.
Finally, Costco put everyone to shame with a 6% increase in comparable U.S. sales. That's right in line with the company's half-year sales increase. The stock is taking a tiny hit, though, as international sales were off the half-year average, up only 4% in February. Overall, the company continues to have an excellent year, and the stock is up 3.5% year to date.
At the other end of the spectrum -- the unfortunate end -- we've got two retailers who should know better. The Buckle (NYSE: BKE ) -- a personal favorite of mine -- posted a 1% decline in comparable sales. The company managed to count it as a win, though, with the market expecting the decline to be much sharper. The denim retailer had a 2% decline in January, so the smaller fall is good news overall. Last quarter, Buckle had a 2.4% increase in comparable store sales.
Finally, Ross (NASDAQ: ROST ) took the bad news cake. While same-store sales only fell 1% -- in line with Buckle -- analysts had been expecting a small gain. On top of the underwhelming month, Ross said that it expected "same store sales in March and April to be down 1% to 2% and up 5% to 6%, respectively." That's a turnaround time that analysts didn't see coming, and that the market has reacted very strongly to. Share of the retailer are down 7% in midday trading.
What it means for the future
While the picture of February is mixed, it's weighted toward the not-so-good end of things. Over the holidays, retailers saw what confusion at the top could do, with consumers in a tizzy about the fiscal cliff. As it stands, the government's position on how it gets from where it is to somewhere more functional still isn't crystal clear. That might mean more confusion and more heartache for retailers -- especially those retailers that sell slightly higher-end discretionary goods.
But that doesn't mean that companies are going to be slammed. Some companies had excellent success over the holidays without having to resort to deep discounting, and that mind-set may simply come back into vogue. Gap, for instance, had a 5% increase in comparable sales over December. Its cheaper Old Navy brand saw the bulk of the increase, with comps up 13% that month. If the economy continues to get jerked around, retailers might just have to think of variable consumer confidence as the new norm.
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