American fashion retailers take 2013 by storm

If it was the British retailers taking the apparel industry by storm earlier in January, their American peers have taken the lead barely weeks afterwards. Columbia Sportswear, Ann Inc., Macy’s, American Apparel…all of them reported strong sales for

the last quarter of last financial year and thus augured a positive start of 2013.

Retailers in the US kicked off 2013 with better-than-expected January sales and also managed to beat market expectations as a whole. The likes of Macy’s, Gap, Nordstrom, Ralph Lauren, Zumiez, Ann Inc. or TJX Cos presented quite encouraging figures to kick off the new year in fashion.

Overall, same-store sales rose 5 percent in January across 20 retailers, according to Thomson Reuters I/B/E/S. That was above both analysts' estimates of a 3.1 percent increase and the one-year-earlier 2.8 percent gain.

January sales were helped by a number of measures including the much talked about "fiscal cliff," growth in jobs and greater wealth from house prices and the rising stock market. The sales figures follow a gloomy December as "People held on to some of their money last month, and when the economic Armageddon didn't transpire they felt a bit more free to indulge," said to ‘Dow Jones’ the head global retail practice at AlixPartners David Bassuk, commenting on the news.

In January, big chains such as Macy’s, Gap and Nordstrom topped Wall Street’s estimates, collectively delivering a 5.8 percent surge in same-store sales, or sales at stores open for at least one year, reported the ‘New York Post’.

Macy’s got everyone talking by the end of the week when it reported total sales of 1.799 billion dollars for the five weeks ending February 2, 2013 (+34.6 percent). Its full year sales were also up, by nearly 5 percent.

The other market mover was Kohl’s. The US-based department store reported a 13.3 percent same-store sales gain, far above the previous estimates. However, the company preferred to remain cautious and left its fourth-quarter profit outlook unchanged. Shares of Kohl’s, which had lowered its holiday forecast in December, dipped 1 percent, to 45.81 dollars on Thursday.

In the meantime, Columbia Sportswear Company reported an 8 percent increase in net income that balanced the 5 percent inter-annual dip in net sales for the fourth quarter. Explaining their strategy, Tim Boyle, Columbia’s president and chief executive officer, stressed that “Diligent expense management throughout the year enabled us to deliver solid results during what proved to be another year of unseasonably warm weather in North America. As a result, despite a slight decline in 2012 full year sales, we were able to achieve 8 percent operating margin, similar to 2011 operating margin of 8.1 percent.” In this context, the fiscal 2013 outlook anticipates net sales comparable to 2012 and operating margins to be in a range of 7.5 percent to 8 percent of net sales.

Also Ann, the parent company for Ann Taylor and Loft brands, expects record earnings per share for the full fiscal year 2012, in spite of the lower-than-anticipated results for the fourth quarter. Gross margin rate performance is expected to be approximately 54.8 percent. It’s noteworthy that during the fiscal year 2012, the company repurchased 4.9 million shares at a total cost of approximately 135 million dollars, resulting in an expected total weighted average diluted share count of approximately 49 million for the full year. Capital expenditures are expected to approach 155 million dollars, highlighted Ann in a communication to stakeholders.

Elsewhere, TJX Cos Inc., and Ross Stores Inc. and Zumiez Inc. raised their outlooks.

But despite the encouraging quarterly and monthly sales data, concerns about the short term will remain for the coming months. It was the case of Gap Inc., which saw its sales above Wall Street forecasts and yet had Janney Capital Markets saying in a note issued earlier this week that investors would view Gap's modest profit estimate for the fourth quarter ended on February 2 as "not good enough." The company's shares were down 4.5 percent in the wake of the commentary.

Nordstrom reported an 11.4 percent increase in same-store sales for January. Similar to many other retailers, Nordstrom follows the retail 4-5-4 reporting calendar, which included an extra week in the fourth quarter of 2012 (the 53rd week). In the 53rd week, the company had preliminary total retail sales of approximately 162 million dollars. The 53rd week is excluded from same-store sales calculations.

In a note to clients released on Thursday, Fitch Ratings augured sharp discounting policies, more weight on online channels and positive momentum for the apparel sector leaders: “While apparel-related retailers will benefit from lower cotton prices and improved inventory control, we expect these retailers will have taken a significant portion of these savings and reinvested into sharper pricing and online channel to drive traffic. Among Fitch rated/monitored apparel retailers Gap, Limited Brands, and Burlington Coat Factory are expected to continue the positive momentum in 2013, on top of their reported comps growth at 5 percent, 6 percent, and 1.2 percent, respectively in 2012.”