Retail sales finished off February on a strong note, as year-on-year gains for the week ending Feb 26th were the strongest since the first week of the new year. Business was driven by the three events during the month – Super Bowl, Valentine’s Day and President’s Day – as well as solid demand for spring merchandise at near-full prices.
Nearly thirty major retailers will report February sales performance on Thursday, and Thomson Reuters expects them to collectively show a same-store sales gain of 3.8% compared to last year. While analysts only expected a 2.7% increase in January, same-store sales actually rose 4.9% even in the face of severe winter weather across much of the country. We believe the storms last month drove business into February, and with plenty of event-driven shopping during the month, expect the final tally will once again beat estimates.
However, rising gas prices are beginning to weigh on the minds of consumers – prices at the pump hit $3.38 per gallon on February 28th according to the U.S. Energy Information Agency, up 25% from last year and the highest since October 28th. Economists estimate each 1 cent increase in gas prices takes $1 billion out of consumers’ pockets, and according to a January survey from America’s Research Group, 65% of consumers will slow spending when gas hits $3.75 a gallon, which is nearly double the 38% who cut back spending when gas hit $4.00 a gallon several years ago.
For the week ending Feb. 26th, The International Council of Shopping Centers (ICSC) reported that chain store sales slipped for the 6th time in 8 weeks so far in 2011, falling 0.5% from the prior week, while sales rose 3.0% compared to the year-ago period. Warmer weather drove demand for seasonal spring merchandise, but rising gas prices are starting to reduce consumers’ purchasing power.
"Sales were choppy during the month with typical weather impacts that tend to get amplified in low volume months — such as February — and a calendar shift in the Presidents’ Day holiday compared with the prior year," said Michael Niemira, ICSC vice president of research and chief economist. "But overall, the month’s trend performance was good and likely helped by an improving economy, despite some increasing drag from rising gasoline prices."
ICSC Research projects that same-store sales rose 2.5-3.0% in February, following a 4.8% increase in January.
Redbook Research reported that same-store sales posted a 3.0% increase last week compared to the year-ago period, following a 2.7% gain in the prior week. Month-to-date, sales are up 2.6% over last year and 1.6% relative to January.
"The President’s Day sales offered opportunities to clear remaining winter inventories contributing to the sales growth." said Catlin Levis, Redbook analyst. She added "Retailers are also optimistic to see early business in spring apparel moving at full price in addition to other seasonal categories, primarily in the warmer parts of the country." She also noted that private label merchandise is selling well.
Looking ahead, Redbook expects a same-store sales gain of 2.8% in March compared to last year, as Easter falls three weeks later this year which will push sales into April from March.
ShopperTrak won’t report weekly sales until later today, but founder Bill Martin had this to say last week: "Since the current week (ending February 26) contains President’s Day in 2011, we are expecting a rather large year over year gain for the week as the last week in February 2010 was a ‘normal’ week without a holiday."
Stay tuned, as well will have full coverage of retailers’ monthly sales reports on Thursday.