L Brands recorded a sharp jump in sales in January, oblivious to the bad weather that bogged down most other retailers last month. The Columbus-based company's comparable-store sales increase of 9 percent - a key indicator of a retailer's health - easily surpassed the 0.5 percent estimate of Wall Street analysts.
February 7, 2014
L Brands recorded a sharp jump in sales in January, oblivious to the bad weather that bogged down most other retailers last month.
The Columbus-based company's comparable-store sales increase of 9 percent - a key indicator of a retailer's health - easily surpassed the 0.5 percent estimate of Wall Street analysts.
Among the handful of retailers that report monthly sales, only Costco managed to join L Brands in exceeding expectations, with comparable-store sales up 4 percent, better than the 3.4 percent predicted by analysts.
"Adverse weather, a dearth of fashion, lack of income gains, holiday shopping fatigue, and no spending catalysts in the end … did keep a lid on sales gains," said Ken Perkins, president of Retail Metrics, a research firm.
Among other retailers reporting January sales, the Buckle saw comparable-store sales drop 6.6 percent, much worse than the 0.3 percent drop expected by Wall Street. Stein Mart reported a 0.7 percent decline, well below the predicted 1.3 percent growth.
"It's pretty clear severe weather had an impact on comparable-store sales, as well as the aggressive discounting that took place throughout the entire holiday season," said Matthew Shay, National Retail Federation president and CEO. "The January numbers … make it clear consumers are still very careful about how they spend their dollars."
Based on the good January numbers, L Brands raised its prediction for earnings for its fourth fiscal quarter, which includes January. Wall Street has been predicting fourth-quarter earnings of $1.60 per share, and the company now predicts the figure will be "slightly above" that number.
Perkins noted that move is "something virtually no retailers have done this quarter."
Among L Brands' chains, Victoria's Secret reported comparable-store sales increased 10 percent, driven by the lingerie brand's semi-annual sale.
The chain's online and catalog business, Victoria's Secret Direct, reported a 12 percent decrease in sales, "as strength in swim and sport (apparel sales) was offset by a decline in apparel," said Amie Preston, chief investor relations officer.
At Bath & Body Works, January comparable-store sales increased 6 percent, also driven by a successful semi-annual sale, Preston said.
The retailer's Canadian lingerie brand, La Senza, reported a 4 percent increase in comparable-store sales.
Even though L Brands trounced Wall Street expectations in comparable-store sales, the retailer did report that sales of $731.2 million for the month were down compared to sales of $986.4 million for the same period last year.
Looking ahead, the nation's retailers can expect a better year.
The retail federation said it expects retail sales to increase 4.1 percent in 2014, better than the 3.7 percent increase last year.
"There's a healthier consumer and business confidence," said Jack Kleinhenz, the federation's chief economist. "I think 2014 could be the year when the recovery finally gets some traction."