Costco, Limited Brands February sales beat forecasts

Thu Mar 7, 2013 8:07am EST

* Costco February comp sales up 6 percent, Limited up 3 percent

* Same-store sales for 13 chains seen rising 1.2 percent-Thomson Reuters

By Phil Wahba

March 7 (Reuters) - Victoria's Secret parent Limited Brands Inc and Costco Wholesale Corp reported better-than-expected sales for February, when consumer confidence about an improving job market offset the impact of higher taxes.

After a difficult January, when shoppers first felt the effect of a payroll tax hike that lowered take-home pay by 2 percent, at least some retailers got a little relief in February from growing employment and a rising stock market.

Warehouse club chain Costco on Thursday reported a 6 percent increase in sales at stores open at least a year, helped by higher gasoline prices as well as strong sales of fresh food and consumer electronics. Wall Street analysts were expecting a 5.1 percent gain, according to Thomson Reuters.

Limited's 3 percent same-store store sales increase also came in higher than expected. The Victoria's Secret lingerie chain led the gains, suggesting shoppers were still willing to spend on some nonessential items.

Some 13 U.S. retailers are reporting February sales results this week. Excluding drugstore chains Walgreen Co and Rite Aid Corp, whose sales are heavily weighted toward prescription drugs, Wall Street analysts expect the other 11 retailers to report a 3.3 percent same-store sales increase.

The Thomson Reuters/University of Michigan's consumer sentiment index rose to 77.6 in February from 73.8 in January, amid optimism over jobs. U.S. private employers added a larger-than-expected 198,000 jobs in February, according to the ADP National Employment Report.

Still, the economy remained difficult for many shoppers.

Low-price specialty apparel chain Cato Corp reported a smaller-than-expected 3 percent drop in comparable sales, but it got help from shopping that was pushed off from January, when many shoppers' tax refunds were delayed.

"February sales reflect the continuing difficult economic environment," Chief Executive Officer John Cato said in a statement.

Despite encouraging signs in the economy, chains that cater to teenage shoppers, who have much less discretionary income, struggled last month. The Buckle Inc and Zumiez Inc both reported a drop in comparable sales for February.

Abercrombie & Fitch and American Eagle Outfitters no longer report monthly sales but have said business will be slow this quarter, which began last month.

Several major retailers stopped reporting monthly sales this month, including Target Corp, Macy's Inc and Kohl's Corp, making the monthly figures less of an indicator of economic health than in the past.

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