Price meant something in January comps

New York – There are winners in every market, in any business climate. In January, the big winners were Wal-Mart, as many expected, as well as the off-price giants Ross Stores and TJX.

Ross Stores and TJX each issued negative comps (-2.0% and -9.0% respectively, although multinational TJX said in “constant currency” its comps were down just -1.0%) for January – yet they also made sunny statements regarding inventory and 2009 outlook.

Ross even went so far as to raise its dividend.

“Both our January and fourth quarter sales were in line with our expectations, said Michael Balmuth, vice chairman, president and ceo of Ross. “More importantly, merchandise gross margin for the fourth quarter was better than expected and up from last year.”

Eyeing full year results, Balmuth said, “For the 52 weeks ended Jan. 31, 2009, earnings per share are estimated to increase 22% to 23% to $2.32 to $2.33, up from $1.90 in the prior year.”

Ross said its board had approved a 16% increase in the quarterly cash dividend to 11 cents per common share, payable on March 31 to stockholders of record as of Feb. 20. “The higher dividend announced today represents the 15th consecutive annual increase since our dividend program was initiated in 1994,” beamed Balmuth.

January results also moved TJX to aim high. “With merchandise margins stronger than anticipated, we now expect adjusted earnings per share to be near the high end of our previously anticipated range,” said Carol Meyrowitz, president and ceo.

Comps at TJX “were within our anticipated range,” she said. “While January is typically a clearance month, I am pleased that we are entering February with inventories that are in excellent shape, clearance levels that were well below last year and extremely fresh assortments for the spring season.”

At Wal-Mart Stores, with January comps up 1.5% company-wide and 2.1% for the U.S. chain, vice chairman Eduardo Castro-Wright was moved to say, “We are pleased that we exceeded our expectations…” and added, “Our sales results were driven by a continuation of gains in customer traffic. Clearly, our stores are performing very well, as we continue to emphasize customer service and innovative merchandising.”

By category, Castro-Wright noted: “Comparable store sales were strong in grocery and health and wellness. Walmart U.S. met or exceeded expectations in home, entertainment and hardlines and continued to outperform the market in these merchandise units.”

While those three merchants were hitting their stride, the rest of the major retailers whose comp sales are tracked monthly by HTT were still fighting an uphill battle.

Target, reporting a 3.3% comp fall in January, said it now expects its Q4 EPS “to be somewhat lower than the current median First Call estimate of 86 cents.”

Macy’s, sustaining a comp drop of 4.5%, pointed again to its “localization” districts, where the My Macy’s merchandising has turned around sales metrics in a number of previously underperforming stores.

JCPenney, where a comp plunge of 16.4% for the month was more severe than the anticipated “low-double digits” decrease, said it now projected Q4 EPS of 90-93 cents, at the low end of its previous guidance of 90 cents to $1.05.

Kohl’s, where the January comp drop of 13.4% was actually a component of what management called “better-than-expected January sales and continued strong inventory and expense management,” said it now planned to exceed the First Call consensus of 99 cents EPS in Q4.

Bon-Ton Stores, with January comps down 8.2%, said its full year gross margin rate would be reduced by about 80 basis points below the rate it had projected – but this would be partially offset by reduced SG&A expense. Keith Plowman, evp and cfo, emphasized, “We ended fiscal 2008 with excess borrowing capacity under our revolving credit facility of $269 million, well above the required minimum availability of $75 million.”

The Johnson Redbook Same-store Sales Index (SSI) of 40 retailers was down 1.8% in January – following a 1.9% drop in December and the 3.3% drop in November – and ended down 0.4% for the fiscal year.

The department store segment of the SSI, in negative territory most of the year, with a 12.2% drop in January registered its third double-digit negative month over the past four months.

Discounters in the SSI, posting a 1.0% comp gain for January, made their strongest showing since September, which was also a 1.0% gain.

Thomas RussellThomas Russell | Associate Editor, FurnitureToday

I'm Tom Russell and have worked at Furniture/Today since August 2003. Since then, I have covered the international side of the business from a logistics and sourcing standpoint. Since then, I also have visited several furniture trade shows and manufacturing plants in Asia, which has helped me gain perspective about the industry in that part of the world. As I continue covering the import side of the business, I look forward to building on that knowledge base through conversations with industry officials and future overseas plant tours. From time to time, I will file news and other industry perspectives online and, as always, welcome your response to these Web postings.

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