Retail sales mixed, lower-priced stores up

Shoppers make their way past Nordstrom at Woodfield Mall in Schaumburg, Illinois, October 22, 2007. U.S. retailers posted mixed February sales results on Thursday as women's apparel continued to struggle while cash-strapped consumers favored outlets where they could save money.

CHICAGO (Reuters) - U.S. retailers posted mixed February sales results on Thursday as women's apparel continued to struggle and department store sales fell, while cash-strapped consumers favored outlets where they could save money.

"Retailers who had more of a value orientation ... tended to do relatively better against other retailers," said Michael Niemira, chief economist for the International Council of Shopping Centers.

Overall, retailers posted a 1.9 percent increase in sales at stores open at least a year, according to the ICSC.

But while that was above the council's forecast range of 0.5 to 1 percent, the increase was largely due to Wal-Mart Stores Inc (WMT.N) reporting better-than expected sales, Niemira said.

Wal-Mart, the world's largest retailer, said same-store sales at its U.S. stores open at least a year rose 2.6 percent in February, excluding fuel sales -- topping the average analyst estimate of 1.1 percent and sending its shares up 1.4 percent.

The company cited continued strength in grocery, health and wellness and entertainment, and said apparel sales improved.

"Wal-Mart's upside surprise is encouraging," Retail Metrics President Ken Perkins said. "They mention their apparel and electronics are up, so that's a good sign."

FEW POSITIVE SIGNS

Wal-Mart was one of the few retail stocks trading higher on Thursday, up 71 cents at $50.30 on the New York Stock Exchange.

The Standard & Poor's retail index .RLX was down nearly 3 percent.

U.S. consumers have had a bleak view of the economy, with sentiment dropping to recessionary levels in February, according to the Reuters/University of Michigan Surveys of Consumers.

Shoppers faced with rising food and gasoline prices as well as falling home values have cut back spending for several months while economists and investors debate whether the economy is in a full-blown recession or has just slowed down.

"It was definitely sort of a mixed bag, with the department stores not doing as well and the discounters outperforming, Wal-Mart in particular," said Sarah Henry, retail analyst at MFC Global, which has $240 billion in assets under management.

J.C. Penney Co Inc (JCP.N) posted a worse-than-expected 6.7 percent same-store sales decline, Nordstrom Inc (JWN.N) sales fell 5.8 percent and Kohl's Corp's (KSS.N) were down 3.8 percent.

LOW PRICE, HIGHER SALES

Warehouse clubs, where consumers can sometimes save money by buying larger quantities, did better.

On Wednesday, Costco Wholesale Corp (COST.O) posted a 7 percent increase in February same-store sales, while BJ's Wholesale Club Inc BJ.N reported a 5.9 percent increase. Both saw their sales helped by rising gasoline prices as both operate gas stations at many of their stores.

Analysts expect only modest gains in overall same-store sales this year, though some expect tax rebate checks to give a boost to sales when they are issued.

"Shoppers are intent on slowing their spending and that will continue in the months ahead," said Frank Badillo, Senior Economist for TNS Retail Forward, in a note.

In other sectors, teen apparel retailers continued to show strength. Pacific Sunwear of California Inc (PSUN.O) said same-store sales rose a better-than-expected 6 percent and Aeropostale (ARO.N) rose a better-than-expected 7 percent.

Women's apparel retailers, conversely, continued to disappoint

AnnTaylor Stores Corp (ANN.N) posted a 1.7 percent drop in same-store sales on Thursday -- though that was less steep than analysts expected -- while Chico's FAS Inc (CHS.N) said on Wednesday that same-store sales were down 14.9 percent at company-owned stores.

Limited Brands Inc (LTD.N), which operates Victoria's Secret, Bath & Body Works and other specialty stores, posted a 9 percent decline in same-store sales, though that was a little better than the average analyst forecast of a 10.7 percent decline.

Also in apparel, Gap Inc (GPS.N) posted a 6 percent decline in same-store sales, worse than the average 2.9 percent drop analysts estimated.

(Editing by Brian Moss and Maureen Bavdek)