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U.S. Retailers' Sales Gains Slow on Weather, Waning Confidence
Cotten Timberlake in New York


March 2 (Bloomberg) -- Shoppers curbed spending at U.S. retailers in February as a blast of winter weather and waning consumer confidence dampened enthusiasm for spring apparel.

Wal-Mart Stores Inc., the world's largest retailer, said comparable sales rose 3.2 percent, less than its gain in January, and that traffic declined. Apparel retailers including Gap Inc., Abercrombie & Fitch Co. and Talbots Inc. fell short of analysts' estimates.

A drop in temperatures and a blizzard that stretched from Washington to Boston hurt sales at stores on the east coast, according to Bill Dreher, an analyst with Deutsche Bank AG. Consumer confidence in the U.S. slid to a three-month low in February because of higher heating bills and a drop in home sales.

``There's a little bit of a slowing effect in February because of the weather, coming on the heels of a very strong January,'' said Dan Popowics, an analyst with Fifth Third Asset Management in Cincinnati, which manages $22 billion in assets including Wal-Mart shares. ``Consumer confidence is moderating.''

Shares of Wal-Mart fell 21 cents to $45.15 yesterday in New York Stock Exchange composite trading. The Standard & Poor's 500 Retailing Index of 28 companies rose less than 1 percent.

Gap Plunges

Gap said same-store sales plunged 11 percent. Sales declined 7 percent at Gap stores in North America, 11 percent at Banana Republic and 14 percent at the Old Navy chain. The results led to ``significantly'' lower merchandise margins, Gap said in a statement.

San Francisco-based Gap was expected to have a sales decline of 5.9 percent, according to Retail Metrics LLC.

Abercrombie & Fitch, which sells casual clothing for teenagers, said comparable sales rose 5 percent, less than the 14 percent estimate.

Costco Wholesale Corp., the largest U.S. warehouse club, said February sales at stores open at least a year rose 8 percent.

Same-store sales at J.C. Penney Co.'s department stores rose 2.3 percent, beating estimates.

Limited Brands Inc., owner of the Victoria's Secret and Express chains, had a 5 percent increase, exceeding analysts estimates of a 3.7 percent gain. The results were led by a 9 percent gain at Express.

Seattle-based Nordstrom Inc. had a 4.9 percent gain, larger than the 3.8 percent estimated. Sales were strongest in the South and Southwest and accessories and cosmetics sold best, the retailer said in a recorded call.

Talbots Results

Talbots, based in Hingham, Massachusetts, posted a 6 percent decline, compared with the 0.1 percent fall analysts had estimated.

``The timing of the Arctic-like temperatures was unfortunate, as most retailers already transitioned into spring,'' Deborah Weinswig, an analyst with Citigroup Investment Research, wrote in a Feb. 23 report.

Wal-Mart, based in Bentonville, Arkansas, had forecast a February gain of 2 percent to 4 percent at U.S. stores open at least 13 months. Today it forecast a gain of 1 percent to 3 percent for March.

Retailers faced tough comparisons after gains a year ago, analysts said. In February 2005, Target posted a 9 percent increase, Nordstrom had a 7 percent rise, and J.C. Penney had a 6.1 percent increase. Those gains were driven in part by a 9.2 percent rise in the average federal tax return and the biggest gain in jobs in four months.

Clearance Sales

Sales for last month were crimped by Federated's clearance sales at 68 stores it's shedding as part of the purchase of May Department Stores Co., analysts said.

About 26.9 inches (68.3 centimeters) of snow fell in New York's Central Park Feb. 11-12, topping the December 1947 record of 26.4 inches, the National Weather Service said.

For the month overall, temperatures were 2.2 degrees colder than last year and 4.4 degrees lower than January, according to Weather Trends International, a Plymouth Meeting, Pennsylvania- based weather consulting firm.

``Weather may play an increasingly important role this winter as high heating bills will weigh down on consumer's disposable income,'' Credit Suisse's Michael Exstein wrote in a Feb. 27 report. The storm wiped ``out the better part of the weekend for shoppers,'' Exstein wrote.

Consumer confidence in the U.S. fell in February, the Conference Board reported Tuesday. Its index fell to 101.7 from 106.8 in January.

Natural gas will be 24 percent higher this winter, and home heating oil up 16 percent, the U.S. Department of Energy reported Feb. 7.

The average price of a gallon of gasoline for the week ended Feb. 27 was about $2.26, according to the U.S. Energy Department, 17 percent higher than a year earlier.

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