Family Dollar, Jos. A. Bank Latest Stores To Deliver Strong Results In Soft Economy
* Brad Kelly
* Wednesday April 8, 2009, 7:21 pm EDT
Family Dollar (NYSE:FDO - News) said Wednesday that its Q2 profit rose 33% as shoppers sought out value. The specialty discounter also raised full-year guidance. Its shares rose 6% to a new high.
Jos. A. Bank (NasdaqGS:JOSB - News) easily beat fiscal Q4 EPS targets as the menswear retailer's sales grew by the most in three years. Its shares jumped 20%.
After the close, California Pizza Kitchen (NasdaqGS:CPKI - News) said Q1 profit likely was twice as strong as Wall Street expected. Youth apparel chain Hot Topic (NasdaqGS:HOTT - News) raised EPS guidance on strong March sales. Shares of both rose in late trading.
Earlier, shares of Bed Bath & Beyond (NasdaqGS:BBBY - News) shot up 24%. The housewares chain late Tuesday reported Q4 profit that easily beat estimates. Sales fell just 0.5%.
"It is still extremely too early to tell, but this might be the beginning of the bottoming process," said Ken Perkins, president of Retail Metrics. "The worst is behind us, though."
Liquidations of Circuit City, Linens 'n Things and Mervyn's have let rivals such as Bed Bath & Beyond, Best Buy (NYSE:BBY - News) and GameStop (NYSE:GME - News) pick up market share and post better results.
"Those closings have funneled millions of dollars in sales to those still standing with no additional costs," said Richard Hastings, a consumer strategist with Global Hunter Securities. "That certainly helps."
Consumers are pinching pennies amid the recession. That's helped discounters from Wal-Mart (NYSE:WMT - News) to Ross Stores (NasdaqGS:ROST - News). Warehouse club PriceSmart (NasdaqGS:PSMT - News) said Wednesday that quarterly profit climbed 34%.
Meanwhile, AutoZone (NYSE:AZO - News) and its peers are benefiting as people hang on to old cars longer and try to do more maintenance themselves.
But the strength of casual eateries like Buffalo Wild Wings (NasdaqGS:BWLD - News) and teen apparel chains such as Aeropostale (NYSE:ARO - News) signals consumers have not cut out discretionary spending entirely.
Overall, consumers have been surprisingly resilient in 2009, economic data show. That's made it easier for retailers to top sharply lowered analyst forecasts.
"The bar is not that high for them to jump over, but we'll take any upside right now," Perkins said.
Q4 earnings among 125 publicly traded U.S. retailers likely fell 25% vs. a year earlier, according to Retail Metrics. Q1 profits are expected to show a 25% dive -- 35% excluding Wal-Mart.
While many retailers are doing well -- 36 have a Composite Rating of 95 or better -- many are struggling mightily.
The economic head winds remain intense. Heavy job losses will continue for several months. Banks are still reeling and reluctant to extend credit to consumers and small businesses.
"After the first quarter, the comparisons get much easier," Perkins said. "But there will continue to be winners and losers; there's no other way around it."
Most retailers report March same-store sales on Thursday. Retail Metrics expects a 0.4% drop vs. a year ago. But sales are expected to fall 4.4% excluding Wal-Mart.
Discretionary retailers, such as specialty and department stores, are most at risk.
But help is on the way, Perkins says. He cites a rebound in consumer confidence, robust promotions, tax refunds and a refinancing boom on record low rates that will put more money into homeowners' wallets.
