Strong Sales for Some Retailers, for Wal-Mart a Dividend

Another "comp" day has come and gone, but unlike most monthly retail sales days we saw beats across the board.

David Paul Morris | Getty ImagesRetailers posted strong sales on Thursday, helped by mild weather, which encouraged shoppers to buy spring clothing.

Well, with the exception of Kohl's [KSS  Loading...      ()   ] . There is always one in the crowd.

In any case cheers to the weather, which helped February's results.

The biggest news of the day was Gap. (Who doesn’t love an underdog sales story?)

Gap [GPS  Loading...      ()   ] proved all those naysayers wrong with positive comparable store sales, or comps, a key metric that measures sales at stores open at least 12 months. Gap's sales not just had a plus sign in front, but it was a gain of 4 percent.

Yes, that color in the stores and the better fabrics in its clothing are driving its business. And I am sure weather did not hurt. Not to mention, a little cat-and-mouse game it played by not revealing how well things were going on last week's fourth-quarter conference call. While I have been touting the response to Gap's new products during my store tours, Gap faked me out on the magnitude of this one.

And now onto other good news, although not as shocking to the system as Gap's.

Nordstrom [JWN  Loading...      ()   ] and Ross Stores [ROST  Loading...      ()   ] both put estimates to shame and came in almost two-times the Street's forecasts.

The high-end consumer still has plenty of steam, while the off-price players are capturing share from the middle players. Some are lost in transition — J.C. Penney [JCP  Loading...      ()   ] — and some just lost — Kohl's.

The Middle Ground

But Macy's is an exception. The department store chain [M  Loading...      ()   ] beat with a 4.6 percent same-store sales increase versus a 3.5-percent estimate from the Street. This comes after a disappointing January. However, even a light January did not keep the company from raising numbers.

Let's face it Macy's is the outlier of the mid-tier players. Training, localization of product and a focus on the omnichannel approach has paid off with consistent comps.

On the other end of the spectrum there is Kohl’s. The company's comps fell 0.8 percent in February versus an estimate of breakeven results. But to be fair, the company did tell us the February comp would be worse than first-quarter guidance of 1 percent. Analysts may not have taken the cue far enough.

Going forward, this is a back-half weighted comp story with renewed pricing efforts. I am not worried for Macy’s quite yet.

Wal-Mart vs. Target

Target [TGT  Loading...      ()   ] put up a 7 percent comp for February with food, apparel  and accessories above company average (cheers to the weather), and household essentials, home and hardlines all increasing. Target no doubt had a little help from the weather, but that is not the whole story. Exclusive product, including the Jason Wu intro in February, as well as momentum in its effort to remodel stores are internal drivers.

But if you can’t give investors favorable comps,  give them dividend growth.

Wal-Mart [WMT  Loading...      ()   ] reported U.S. same-store sales of 1.5 percent for fourth quarter (We do not know how February fared because the company no longer reports its sales on a monthly basis). The fourth-quarter sales were disappointing and raised questions about when its investment in keeping prices low was having the desired effect. While traffic turned positive, last quarter's results were simply not enough.

On Thursday, Wal-Mart suggested its U.S. business is “back on track” and raised its dividend by 9 percent. (WMT raises every year). While returning cash to shareholders is always a welcome move, consistent comps are the key — especially with the backdrop of strength reported today.

Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years.

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