March Leaves Most Retailers in Retreat

Double-digit Comp Declines Hit Mid-tier Merchants

Jeff Linville, James Mammarella, April 21, 2008

Why not start with some good news? Ross Stores had such a good first quarter, the 918-unit off-price retailer raised its first-quarter earnings guidance. As did the world's largest retailer, Wal-Mart. For them, business in March was good. For the rest of retail, not so much.

Of the 15 chains with monthly sales reports tracked by HTT, four had positive comps: Costco, Sam's, Fred's and Wal-Mart. One, TJX, was flat. Nine had negative comps.

Double-digit comp store declines hit retailers square in the middle: Dillard's, Gottschalks, JCPenney, Kohl's and Stein Mart were the in the "steepest" club. It should be noted that Macy's no longer reports monthly sales — its quarterly figures are due out on May 14.

Even Ross Stores, which raised its 1Q earnings plan to the range of $0.56 to $0.58 from its prior $0.52-$0.54 (compared to $0.48 for the year-ago quarter), was contending in March with a comparable store sales drop of 2.0%. Of note however, said Michael Balmuth, vice chairman, president and ceo, "Dresses, shoes and home were the best performing merchandise categories."

"Softness continued in the home unit," was the pithy refrain at Wal-Mart, while overall trends were good enough to move evp and cfo Tom Schoewe, to announce the elevated guidance of EPS "from continuing operations for the first quarter of fiscal year 2009 to a range of $0.74 to $0.76. This is an increase from the previous earnings guidance of $0.70 to $0.74."

Home was not mentioned at 1,613-store Target, where comps fell 4.4% for March.

TJX offered a mixed message, with svp investor relations Sherry Lang stating that home fashions comps decreased 4% in the core T.J. Maxx and Marshalls stores — but also that, "Across TJX, we continue to see home categories buck soft industry trends." Lang pointed to lowered inventory levels and "greatly improved turn" in home, which could indeed bode well.

JCPenney, which roiled the industry on March 28 when it slashed its first quarter guidance, showed a 12.3% slump in March comps — against a very strong 11.0% gain in the year-ago period. Still, overall March sales fell 10.3% at the $19.9 billion mid-tier giant.

JCP said of its swing-for-the-fences partnership with Polo Ralph Lauren, "Customers are responding positively to new American Living product across all categories in which it is available," which include a full range of bed and bath collections.

Meanwhile at Kohl's, a 15.5% comp decline in March pushed nine-week year-to-date comps to negative 11.1%. Chairman and ceo Larry Montgomery sounded firm that April would be better, resulting in "negative high-single-digit" comps for the first quarter. "We have been conservative in our inventory planning and expense management and will continue to do so until the environment improves," Montgomery said.

Kohl's, which held grand openings of 14 stores on April 10, plans to enter the Miami-Ft. Lauderdale market in the third quarter, part of its goal of 70 to 75 new doors this year.

At Bon-Ton Stores, where same-store sales now include all units from the company's acquisitions from Saks Inc. and Belk, comps fell 5.3% in March. While soft home was not mentioned, vice chairman and president-merchandising Tony Buccina said hard home and furniture were among categories that performed well, perhaps a good indicator for soft home in weeks ahead.

The Johnson Redbook Same Store Sales Index (SSI) reported a 1.0% comp decline in March among the 40 mostly softlines retailers tracked, with 70% of the chains posting negative comps. The department store segment, with a collective 10.7% comp fall, was hurting more than any other, although the apparel specialty group saw comps down 8.1%.

Five weeks ended April 5a(dollar amounts in millions)

2008 sales 2007 sales Total % chg. Same-store % chg.
a. Reporting periods vary from chain to chain.
b. Costco: 5 weeks and 31 weeks ended Apr. 6.
c. Duckwall-ALCO: 5 weeks and 9 weeks ended Apr.6.
d. JCPenney: comps for stores only; no longer breaks out direct-to-consumer sales.
e. Wal-Mart: 5 weeks and 9 weeks ended Apr. 4; Int'l not included in comps.
f. Family Dollar: 31 weeks.
The Bon-Ton Stores $274.0 $288.0 (4.9) (5.3)
Costco b $6,570.0 $5,930.0 11.0 7.0
Dillard Dept. Stores $621.7 $679.6 (9.0) (10.0)
Duckwall-ALCO c $43.1 $41.9 2.9 (5.6)
Family Dollar $641.2 $651.4 (1.6) (4.4)
Fred's $178.3 $171.6 4.0 1.2
Gottschalks $49.1 $58.9 (16.6) (15.4)
J.C. Penney d $1,538.0 $1,715.0 (10.3) (12.3)
Kohl's Corp. $1,425.7 $1,547.7 (7.9) (15.5)
Ross Stores $633.0 $599.0 6.0 (2.0)
Stein Mart $138.6 $162.5 (14.7) (17.1)
Target Corp. $5,676.0 $5,592.0 1.5 (4.4)
TJX Cos. $1,730.0 $1,700.0 2.0 0.0
Wal-Mart Stores Inc. e $36,973.0 $34,255.0 7.9 1.1
Wal-Mart Stores $23,213.0 $22,116.0 5.0 0.9
Sam's Club $4,287.0 $4,156.0 3.2 2.1
International $9,473.0 $7,983.0 18.7 NA
The Bon-Ton Stores $491.0 $525.6 (6.6) (6.2)
Costco b $41,340.0 $36,960.0 11.0 7.0
Dillard Dept. Stores $1,203.3 $1,272.8 (5.0) (7.0)
Duckwall-ALCO c $76.3 $74.7 2.1 (6.1)
Family Dollar f $4,156.8 $4,199.4 (1.0) (1.1)
Fred's $326.8 $315.4 4.0 1.1
Gottschalks $86.8 $101.5 (14.5) (12.9)
JCPenney d $2,794.0 $3,029.0 (7.8) (9.9)
Kohl's Corp. $2,397.3 $2,477.0 (3.2) (11.1)
Ross Stores $1,077.0 $994.0 8.0 1.0
Stein Mart $234.8 $266.8 (12.0) (14.5)
Target Corp. $10,049.0 $9,718.6 3.4 (2.3)
TJX Cos. $3,000.0 $2,900.0 4.0 1.0
Wal-Mart Stores Inc. e $66,161.0 $61,049.0 8.4 1.9
Wal-Mart stores $41,776.0 $39,689.0 5.3 1.6
Sam's Clubs $7,650.0 $7,315.0 4.6 3.4
International $16,735.0 $14,045.0 19.2 NA

Same-store sales % change

Costco 7.0%
Sam's Club 2.1
Fred's 1.2
Wal-Mart 0.9
Stein Mart -17.1%
Kohl's -15.5
Gottschalks -15.4
JCPenney -12.3
Dillard's -10.0
Duckwall-ALCO -5.6
Bon-Ton -5.3
Family Dollar -4.4
Target -4.4
Ross Stores -2.0

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