Weather May Have Wrecked January Retail Sales
The eastern half of the U.S. was battered by two nasty polar storms and multiple snow and ice storms that kept shoppers out of the stores and snugly tucked in at home. Holiday shopping fatigue, stagnant wage growth, and heavy competition also played roles, but the weather is going to take most of the blame for the slow sales growth.
Among the stores tracked by Retail Metrics, the worst performer is expected to be Zumiez Inc. (NASDAQ: ZUMZ) where sales are targeted to fall 3.3% compared to January 2013. Gap Stores Inc. (NYSE: GPS) are tabbed to post a drop of 1.1%, and The Buckle Inc. (NYSE: BKE) is expected to see a drop of 0.3%. Last year same-store sales growth at Zumiez rose 2.6% in January compared with January 2012, while total Gap sales rose 8%. Buckle posted a bigger drop of 2% last year.
Even stores expected to post gains are not likely to meet or beat last year’s gains. Costco Wholesale Corp. (NASDAQ: COST) is expected to post a gain of 3.4% compared with a rise of 4% a year ago. L Brands Inc. (NYSE: LB)is expected to post a rise of 0.5% this year compared with a gain of 9% a year ago. Only PriceSmart Inc. (NASDAQ: PSMT) is tabbed to post a significantly larger gain this year. The Retail Metrics estimate for PriceSmart calls for a rise of 7.4% in January compared with a rise of 3.9% a year ago.
And the bad news may not be limited to January. Consumers’ heating bills for January, which will be arriving this month, are likely to be higher than people are used to and could put some curbs on discretionary spending again in February. Expectations are so low for growth that some positive surprises are also possible in February, but that would be due almost entirely to retailers leaping over a very low bar.